Technical outlook:
The US dollar index seems to have finally carved a higher low around 101.00 on Wednesday. The index has rallied through 101.66 and is seen to be trading near the day's high as the bulls prepare to come back in control. Interestingly, the bulls have carved a Morning Star candlestick pattern on the daily chart (not seen here), which gives further confidence for a turn higher.
Immediate price resistance is now seen at 103.00 and a break higher will confirm that the bulls are back in control and prices pushing towards 106.50. Ideally, prices should now hold above the 100.50 swing support, to keep the bullish structure intact. The larger-degree wave structure suggests a sharp rally from here soon.
Also, note that prices are bouncing from just below the Fibonacci 0.786 retracement of the previous rally between 100.50 and 105.50. This is the last line of support and a break below 101.00 from here will be encouraging to the bears. In that case, the US dollar index could slip below 100.50 and nullify the bullish scenario.
Trading idea:
A potential rally towards 106.50 against 100.50
Good luck!
