As the US dollar index hovers near an important support trendline, traders are left with uncertainty regarding the future direction of the currency. While the index is currently trading around the protective trendline that connects the lows from December 2023 and March 2024, there are conflicting technical signals that make it difficult to predict its next move.
If the US dollar index breaks below the crucial 104.00 level, it is likely to trigger a bearish trend that could push the price towards the 103.60 support area. Further downward movement could find stability around the May support line at 103.18, as well as the 23.6% Fibonacci retracement level at 102.70. Additionally, the long-term descending trendline from September 2022 could come into play, leading to even steeper declines.
On the other hand, if the bulls manage to push the US dollar index above the 20-day simple moving average at 104.54, there may be a chance for a bullish reversal. However, the descending trendline from the peak in May might act as a barrier to further upside momentum, with the 38.2% Fibonacci retracement level at 105.12 posing another obstacle. If the rally persists, the focus will shift to the 105.50 area.
Despite the mixed technical signals and uncertain outlook, the US dollar index could potentially see a turnaround and head higher if the 104.00 support level holds. Traders will need to closely monitor key levels and indicators to gauge the strength of any potential moves in either direction. The current situation presents both risks and opportunities for those trading or investing in the US dollar index.