Technical outlook:
The US dollar index reversed sharply on Friday as expected and approached the 101.90 mark. The index is seen to be trading close to 102.06 at this point in writing as the bears prepare to drag the price further towards 101.40 in the near term. Ideally, the price should stay below 103.20 in the near term and print a low at about 101.30 at least.
The US dollar index is still unfolding its larger-degree contracting triangle, which is expected to terminate below the 104.23 high. The index is still working on potential Wave D to terminate around 101.30, which should be followed by another rally towards the 103.30-40 zone. The index would be set for a major bearish reversal thereafter.
The US dollar index is currently working on a lower-degree downswing between 103.30 and 101.80. Prices are pulling back towards intraday resistance at about 102.20. Also, note that 102.20 is close to the Fibonacci 0.382 retracement of the above downswing. Hence, the probability remains high for a bearish bounce.
Trading idea:
A potential drop towards 101.40 to resume soon.
Good luck!
