Technical outlook:
The US dollar index dropped to 103.00 during the early Asian session on Wednesday before finding some bids coming. The index is seen to be trading close to 103.30 at this point in writing as the bears might be poised to drag the price towards the 102.50 support. The index has found interim support around the Fibonacci 0.50 retracement level of the rally between 100.50 and 105.50 levels respectively.
The US dollar index has the potential to further drop towards the 102.40-50 mark before resuming higher again. Please note that 102.50 is also the Fibonacci 0.618 retracement of the above rally. Hence, the probability of a bullish reversal remains high. If the bulls are successful in breaking above 103.55, it would confirm a bottom in place at 103.00.
The US dollar index is heading higher towards 106.00 and 109.00 in the medium term. The bulls are inclined to come back in control from here or from 102.50 and push through 106.00-50, followed by 109.00. Ideally, prices should remain well supported above 100.50 as the bulls are poised to keep the structure intact.
Trading idea:
A potential rally to 106.00 and higher
Good luck!
