FX.co ★ Technical analysis of USDX for August 4, 2016

The Dollar index has broken out of the bearish short-term channel. I warned bears that the Dollar was about to reverse higher any time soon and this is what happened. The 95-support level provided a good bounce and bulls now need to see a follow-through in order for the uptrend to pick up pace.

The Dollar index reversed from the area between the 50% and 61.8% retracement levels and is testing short-term resistance by the kijun-sen indicator at 95.80. The most important short-term resistance is at 97 where the Kumo is found. Support is at 95.

The weekly candle is holding as expected around the kijun- and tenkan-sen indicators. With NFP coming out tomorrow we could expect some big moves that could ignite the next leg up towards 100. A bad report tomorrow could push the Dollar index towards 94.50 but any move lower than 94 will increase the chances of a bigger correction below 90.