The US dollar index has hit a crucial level near the support trendline at 104.00. While this could potentially mark the beginning of a new bullish phase, the technical signals are mixed and uncertain. The stochastic oscillator is hovering near oversold territory, but the RSI remains below the neutral mark of 50. Additionally, the MACD is negatively charged below the signal line. These factors, combined with the price struggling to move above its SMAs, suggest that there are negative risks in play.
Should the US dollar index dip below the 104.00 level, it may trigger further bearish action, potentially moving towards 103.60. Subsequent support could be found around the 103.18 level, with additional downside pressure at the 23.6% Fibonacci retracement level of 102.70. The bears are looking to push the index lower, potentially towards steeper declines along the long-term descending trendline.
On the other hand, the bulls may try to push the index above the 20-day SMA at 104.54. However, they could face resistance near the descending trendline from the May peak and the 38.2% Fibonacci retracement level at 105.12. If the bullish momentum continues, the spotlight will be on the 105.50 area. Despite the mixed signals, there is a chance for the US dollar index to turn higher if the 104.00 support holds.
The US dollar index is at a critical junction, with technical indicators sending conflicting signals about its future direction. While the potential for a bullish reversal exists, the index must overcome several key resistance levels to confirm a sustained uptrend. Conversely, a break below the 104.00 support could pave the way for further downside momentum. Traders will have to closely monitor price action and key levels to determine the next major move for the US dollar index.