• The previous week was very bearish for the dollar index, while this week, we see a bullish consolidation into a correction.

Dollar index chart analysis

The previous week was very bearish for the dollar index, while this week, we see a bullish consolidation into a correction. On Monday, the dollar fell to the 104.84 level, stopping the fall and initiating a bullish consolidation. On Wednesday, the index rose to the 105.80 level, where it encountered the EMA50 moving average, which at that moment did not allow a breakthrough above and continued on the bullish side.

After the EMA50 moving average rejection, the dollar goes on the defensive and pulls back to support at the 105.40 level. Yesterday, we formed a new bottom of the price from which we started the recovery of the dollar index with a bullish impulse. That move took us up to the 106.00 level.

106.00 level as a springboard for a bullish option

During the Asian trading session, the dollar moved in the 105.80-106.00 range. The same movement continued in the EU session. We need a breakthrough above this zone in order to get rid of the bearish pressure and move smoothly into further recovery on the bullish side. Potential higher targets are 106.20 and 106.40 levels.

We need a negative consolidation and pullback to the 105.60 level for a bearish option. Thus, we would move below the EMA50 moving average, which would have a negative effect on the dollar index. There would be an increase in bearish pressure, and it would be expected to see a further pullback to lower support levels. Potential lower targets are 105.40 and 105.20 levels.

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