• The US Dollar Index bounced off its weekly low to break the two-day downtrend.
  • A two-day-old falling trend line, the 23.6% Fibonacci retracement keeps an immediate upside.
  • 100-EMA limits short-term declines before the monthly support line.
  • Steady RSI, sustained bounce off key EMA buyers in favor of buyers.

The US Dollar Index (DXY) takes offers to refresh its intraday high around 104.50 ahead of Friday’s European session.

The greenback’s gauge against the six major currencies refreshed the weekly low before bouncing off the 100-EMA level the previous day. That said, the stable RSI (14) also supports the DXY recovery and hints at the sustained higher price going forward.

However, a convergence of Wednesday’s descending trendline rejoining the May 30 23.6% Fibonacci retracement level to the mid-June advances around 104.75 looks like a tough problem for traders to solve. DXY bulls.

Should the greenback bulls manage to break above 104.75, the likelihood of a new multi-month high, currently around 105.80, cannot be ruled out.

On the contrary, pullback moves could retest the 100-EMA level of 103.50, with the 38.2% Fibonacci retracement near 104.10 acting as immediate support.

Even if the quote falls below 103.50, the golden ratio of 61.8% Fibonacci and an upward sloping support line from late May near 103.00 and 102.75 respectively will be crucial to invite bears.

DXY: four-hour chart

Trend: continuation of the expected increase