US dollar index futures jumped above the 17-month trough of 94.60 today and spiked near the 96.00 number, filling the negative gap posted on Monday. The RSI penetrated the downtrend line to the upside in the oversold zone, suggesting a potential upside correction of the aggressive selling interest, while the MACD is still falling below its trigger and zero lines.
If the market corrects higher, the bullish action may pause initially near the 23.6% Fibonacci retracement level of the downward wave from 99.80 to 94.60 at 95.80 and the 96.00 handle. A rally on top of the latter would probably stage buying pressure towards the 38.2% Fibo of 96.57.
On the other hand, violating the 95.15 support, could see losses extending towards the 94.85 and the 17-month low of 94.60 barriers. Even lower, the bears could stall around 94.45, taken from October 2018.
Overall, in the short-term, the index turned strongly bearish after the bounce off the three-year peak of 99.80. The medium-term 100- and 200-simple moving averages (SMAs) are flattening despite the latest bearish run.