The US dollar index is pulling back down towards the short-term support of the 38% retracement. The USD index is making a corrective pullback against the new uptrend that started at 93.10. I expect the uptrend to resume after this pullback is completed around 94.80. New highs above 95.85 will confirm the end of the correction and the start of a new upward move.
The US dollar index has broken above the Ichimoku cloud resistance and made an impulsive upward move to 95.85 from 93.10. The index is now making a pullback and I expect the 38% retracement to hold this decline and become the level where a reversal to the upside starts. If the 38% retracement is broken, the next support will be the 61.8% retracement.
Despite the pullback, the weekly chart shows important signs of a possible reversal as the price is above the kijun-sen. The weekly pullback almost reached the 38% retracement so the bullish scenario of a new upward move is very possible. As long as the price is above 93.10, I expect at least one more higher high above 95.85. Breaking below 93.10 will be a bearish signal that will bring the index at least towards 92.30.
The material has been provided by InstaForex Company – www.instaforex.com