The Dollar index is currently in a sideways corrective phase. Prices are making overlapping patterns, and there is no sign of a clear impulsive trending move. The trend in bigger time frames may remain downward, but for the short term, prices are trendless.
The decline from 80.75 could very well be completed, so for the short term, we are not much in favor of short positions. Prices could make a move towards 79.75 if the short-term resistance at 79.35 is broken upwards. For the time being, we give more chances for an upward bounce than a continuation of the decline to new lows.
The daily chart shows very clearly how the trend remains downwards. Important support level for this downward move is the 78.90-70 area that is going to be tested over the coming weeks. Prices are trading within a downward sloping channel and unless the index breaks above 80.85, then we cannot talk about a trend reversal. Any upward bounce is corrective and should be met with selling. Until the trend channel is broken upwards, this is our longer term view.
