As expected, the dollar index got rejected at resistance and is back near its lows made on January 4th. The reversal in the index is of a bigger degree than normal and I expect further decline in the next few days. However the 102.50 mark is a key level now.
The dollar index broke below the green trend line which was an important short-term support. Price bounced to back test the breakout area and got rejected by the Ichimoku cloud and the 50% Fibonacci retracement. Short-term resistance is now at 102.50 and bulls need to break it in order to see new highs near 104.50-105.
Green line - long-term support
The weekly candle is weakening and has broken the first important support of 102.16 which I mentioned yesterday. Next important support is at 101.28. If we break below it, we should expect a sharp move lower towards 99. Oscillators were warning for a pullback over the past few weeks and I believe the uptrend is unfolding and an important correction has started.
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