Technical outlook:
The US dollar index dropped through the 101.55 lows intraday on Thursday before finding bids and pulling back higher again. The index rallied through the 102.20-25 zone early on Friday and is seen to be trading close to 102.10 at this point in writing. The bulls are now looking inclined to come back in control and push towards the 104.70 interim resistance in the near term.
The US dollar index has managed to find support at the Fibonacci 0.786 retracement of the previous rally between 100.50 and 105.50 as marked on the 4H chart. Furthermore, the 101.50-55 zone is also the Fibonacci convergence as the 1.618 extension is also passing through. Also, note that the bulls have carved a Morning Star bullish pattern as well thereafter.
All the above convergences are clearly indicating a sharp potential bullish reversal ahead. A potential remains for the bulls to extend the rally towards 106.50 and up to 109.00 in the coming weeks. Ideally, prices need to stay above 100.50 to keep the bullish structure intact. Intraday support should be seen close to the 101.80-90 zone.
Trading idea:
A potential bullish reversal towards 106.50 against 100.00
Good luck!
