FX.co ★ Trading plan for US dollar index on February 03, 2023

Technical outlook:

The US dollar index finally bottomed at 100.51 over the last week as the bulls staged an impressive rally towards 102.80 post-NFPs last Friday. The index is currently trading around 102.75 at this point in writing as the bulls remain poised to push higher towards 106.40 in the near term. Short-term resistance at 102.50 has been broken, so there might be intraday pullbacks before the rally resumes.

The US dollar index now seems poised to retrace the entire drop between 114.70 and 100.50 levels. The potential target levels are 106.40 and up to 109.00 in the weeks to come. Also, note that the first meaningful resistance is at 105.35 which falls in line with the initial target potential around 106.40.

The US dollar index might drop below 102.00 in the near term before resuming its rally higher again. Besides, note that 109.30 is the Fibonacci 0.618 retracement of the entire drop between 114.70 and 100.50. Hence, the probability of a bullish reversal remains high. Only a consistent break below 100.50 will nullify the above bullish outlook.

Trading idea:

Potential bullish move against 100.00

Good luck!