Forex MT4.MT5 Trend Analysis: US Dollar Index Technical Outlook

The U.S. dollar index has reversed since last Friday. Although the U.S. non-farm payrolls report made the U.S. dollar generally bullish, the dollar quickly gave up its gains after the data was released, resuming the overnight reversal trend. At the time, the trend in the US dollar index seemed to be running out of steam, so the pullback seemed to be proceeding in an orderly fashion.

 

The first area of support lies in the line of the June high of 105.81. This level sits below the May trendline and could act as a good stop if the pair fails to hold the June high. Potential bulls may be looking for potential entries around the aforementioned levels.

 

For bears, a pullback could be tricky for bears despite the near-term bearish outlook for the U.S. dollar. This is because this retracement does not mean that the dollar will fall sharply, but rather a sideways move after a wave of upside. A consolidation rather than a retracement in the exchange rate could mean the US dollar index is headed for another move higher in the future.

 

All in all, the outlook for the US dollar index remains bearish, or at least sideways. While the U.S. dollar index appears to be lacking momentum at the moment, the consolidation could be short-lived if the U.S. dollar index sees more momentum. More broadly, the dollar remains in a strong uptrend and any signs of weakness would be seen as a buying opportunity on dips.