Technical outlook:

The US dollar index dropped lower towards 96.66 yesterday fulfilling minimum requirements for a corrective drop a-b-c as labelled above. It is still possible that the underlying prints yet another shallow low at 96.50 before turning around on the bullish side. Please note that the current drop is just the last wave of the correction that began from 97.60 levels earlier. Looking at the wave structure, it resembles a perfect picture of an impulse, followed by a corrective drop as highlighted on the 4H chart view. Besides, note that prices are bouncing from the 50% retracement of the previous rally between 95.85 through 97.60 levels respectively. A push through 97.20 levels would confirm that a meaningful bottom is in place at 96.60 and that the US dollar index is headed higher. It is a safe trading strategy to remain long from current price action and target higher levels going forward.

Trading plan:

Long from 96.80 and add more at 96.50, stop at 95.80 and target is open.