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

Technical outlook:

The US dollar index seems to have bottomed at 101.00 recently and is preparing to stage a rally towards 106.00 and up to 109.00 in the next few trading weeks. The index is seen to be trading close to 101.45 at this point in writing as the bulls are looking inclined to break above the 103.00 resistance in the near term.

The US dollar index is potentially into its final wave within a larger-degree counter-trend rally towards 106.00. A break above 103.00 and 104.70 will confirm that the bulls are back in control and prices would accelerate further. Also, note that prices have bounced off the Fibonacci 0.786 retracement of the recent upswing between 100.50 and 105.50.

On the flip side, if prices continue to drift lower from here, the instrument could break below 100.50 indicating a further bearish move ahead. In that case, any pullback rally would stay below 105.50 and the index would turn into a sell-on-rallies case. For now, we remain biased towards upside potential through 103.00 with risk below 100.50.

Trading idea:

A potential rally against 100.50

Good luck!