FX.co ★ Technical analysis of USDX for June 6, 2016

As we had expected, the Dollar index made a pullback through our first target of the 38% retracement and even reached the 50% Fibonacci retracement. The trend is bearish for the short-term.

Blue lines - bullish channel

The bullish channel was broken from last week and we noted promptly that a correction was near and our first target was the 38% Fibonacci retracement. The dollar weakened amid a drop in NFP numbers announced on Friday. This caused a breakdown.

The weekly candle reached the lower cloud boundary after being rejected by the kijun-sen (yellow line indicator). This rejection was noted and a warning was given to dollar bulls last week. A weekly close below and out of the cloud area will be a longer-term bearish signal. This will mean that the correction

is not ended at the 38% Fibonacci retracement of the rise from 2014, but could extend lower towards the 50% or even the 61.8% Fibonacci retracement.