US dollar index is bearish against 94.55 mark

Technical Analysis:

The US dollar index is testing potential short term resistance around 93.90-94.00 zone, before reversing lower again. The corrective rally A-B-C, which began from 89.20 mark on January 6 might be complete around 94.55 mark.

Also note that the index has tested fibonacci 0.382 retracement of the entire drop between 103.00 and 89.20 levels respectively. Potential remains for a corrective decline towards sub 91.50 levels at least if not lower.

Further, the index has also tested its Elliott Channel resistance as displayed on the daily chart. It is testing the upper channel resistance at the time of writing and could resume lower from here. The November 2020 resistance has also been taken out, which call for a pullback.

If the proposed structure holds well, the US dollar index remains well placed for a corrective drop toward 91.50-92.00 zone in the next few weeks. Alternatively, a push through 94.55 levels will test 95.00 and 96.00 levels before finding resistance again.

Traders might be preparing to initiate fresh short positions around 93.90-94.00 zone, with risk above 94.55 and potential target toward 92.00 and 91.50 levels respectively. Watch out for a break below 93.50 to accelerate further.

Prepared by

Finacademy Technical Team