Technical outlook:
The US dollar index dropped further on Tuesday close to 101.00 before finding some bids. The index is seen to be trading just above 101.20 levels at this point of writing as the bulls prepare to be back in control. A Morning Star or Engulfing Bullish candlestick pattern here will confirm a potential reversal against initial support at 100.50.
The US dollar index is testing the final Fibonacci ratio at 0.88 (not highlighted here), which could be the turning point on either side. A turn higher will keep the bullish structure intact with possibilities of the price pushing through 103.00 and 104.70 going forward. On the flip side, a break lower will open the door to test 100.50 and lower levels.
Please note that the 103.00 initial resistance remains a key to the next possible wave. A break higher would confirm further strength towards 103.70, 104.70, and 105.50 levels respectively. The index is consolidating after a huge price action on Tuesday and is expected to remain subdued for a while. The price is still looking higher as long as 100.50 remains intact.
Trading idea:
A potential rally against 100.50
Good luck!
