Dollar index tumbled sharply overnight and dived through 55 day EMA to close at 94.91. At this point, price actions from 96.93 are seen as a correction only. Hence, we’d look for strong support at 38.2% retracement of 89.20 to 96.93 at 93.97 to contain downside. The level is also close to 55 week EMA at 93.77. That would set the base for resuming the up trend from 89.20 through 96.93 at a later stage.
However, sustained break of 93.97 will argue that rise from 89.20 has already completed at 96.93. The three wave structure in turn suggests that it’s a correction to the down trend from 102.99. Such development, together with the index back below 55 week EMA, would be rather bearish and could set up another medium term fall through 89.20 later in the year.
