The US dollar index slipped through 104.00 during the New York session on Tuesday before finding support. The index managed to pull back from the overnight lows and is seen to be trading close to 104.50 at this point in writing. Ideally, prices should stay below the 105.00 level as the bears prepare to drag the price lower towards 102.50 at least.
The US dollar index is unfolding a larger-degree corrective wave structure, which began around 100.50 in early February. The projected targets are seen at around 106.50 in the near term, followed by 108.00. Within the proposed corrective rally, the index might have terminated its first wave close to 105.00 as seen on the 4H chart.
If the above is correct, prices should stay below 105.00 and drag lower to 104.00 and 102.50 in the next few weeks. A drop below 104.00 will confirm the same and accelerate the move towards the 102.50-103.00 area. Also, note that 102.50 is the Fibonacci 0.618% of the recent rally between 100.50 and 105.00 levels, hence the probability for a bullish turn remains high.
Trading idea:Potential short-term drop to 102.00, then resume higher
Good luck!