FX.co ★ Trading plan for US dollar index on February 07, 2023

Technical outlook:

The US dollar index rallied through the 103.40 highs during the New York session on Monday before finding resistance. The index is seen to be trading close to 103.10 at this point in writing as the bulls prepare for the next run higher up to 104.50. Intraday dips remain possible and support comes in just below 103.00 to consider adding potential longs.

The US dollar index is now on its way to carving a meaningful retracement towards 106.50 and up to 109.40 levels in the next several weeks. The initial price resistance is also seen through 105.35, which should be the near-term target for the bulls to break higher. We can expect a meaningful pullback thereafter through 103.00 before the rally could resume.

The US dollar index is expected to reach the 109.00-40 zone to complete its corrective rally, which is also the Fibonacci 0.618 retracement of the entire drop between 114.70 and 100.50 levels respectively. A high probability remains for prices to turn lower from there but a persistent push above 111.65 will confirm that the bulls are looking to target fresh highs.

Trading plan:

Potential bullish wave against 100.50

Good luck!