The US dollar index is currently hovering near an important support trendline, making traders wary of the next move. While there is a possibility of a new bullish phase, the technical signals are uncertain at the moment. The stochastic oscillator is flirting with the oversold territory, the RSI is struggling to break above the neutral mark, and the MACD is showing negative momentum. Additionally, the price has not been able to surpass its simple moving averages, indicating underlying weakness in the index.
If the US dollar index breaks below the key level of 104.00, it could trigger a bearish move towards 103.60. Further downside pressure may push the index towards the support line at 103.18, followed by the 23.6% Fibonacci retracement level at 102.70. A breach of these levels could result in a more significant decline, with the long-term descending trendline acting as a barrier to any bullish attempts.
On the other hand, if the bulls manage to push the index above the 20-day SMA at 104.54, they could target the 38.2% Fibonacci level at 105.12. A sustainable rally beyond this point could bring the focus to the 105.50 area. Despite the current technical headwinds, there is still a chance for the US dollar index to rebound if the 104.00 support holds firm.
The US dollar index is at a critical juncture, with conflicting signals from technical indicators. Traders are advised to closely monitor the price action around the 104.00 level, as it could determine the future direction of the index. While the downside risks are prevalent, a successful defense of the support could pave the way for a potential upside move. As always, risk management and caution are paramount in navigating the uncertain waters of the currency markets.
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