- US Dollar Index bounces off six-month low, stays inside falling wedge bullish chart pattern.
- Oversold RSI, multiple hurdles to the south also keep buyers hopeful.
- 61.8% Fibonacci retracement level guards immediate upside, 200-DMA acts as an extra filter to the north.
US Dollar Index (DXY) battles with the bears at the lowest levels since June, defending 104.00 during early Wednesday in Europe. That said, the monthly falling wedge and overbought conditions of the RSI (14) seem to tease buyers ahead of the key Federal Open Market Committee (FOMC) monetary policy meeting.
It’s worth noting that the 61.8% Fibonacci retracement level of the DXY’s March-September upside, near 104.25, guards the quote’s immediate upside ahead of the stated wedge’s upper line, close to the 105.00 threshold.
In a case where the greenback’s gauge versus the six major currencies manages to stay firmer past 105.00, an upward trajectory towards the 200-DMA hurdle of 106.75 and then to the theoretical target of 109.50 can’t be ruled out.
During the expected run-up, the 108.00 and July’s peak near 109.30 could act as an intermediate halt.
On the flip side, the stated wedge’s lower line near 103.50 restricts the quote’s nearby fall, a break of which could direct the US Dollar Index bears towards lows marked during early May and the 78.6% Fibonacci retracement level, respectively near 102.35 and 101.30.
Should the DXY remains bearish past 101.30, the sellers could aim for the psychological magnet surrounding 100.00.
US Dollar Index: Daily chart
Trend: Recovery expected