The US dollar index is turning lower and testing the rising wedge channel support. This is the time to be bearish or neutral on the US dollar as there are signs of an approaching price reversal. I have been cautious and neutral on the US dollar for the last couple of weeks as the price did not make any significant breakout.

Blue lines - bullish channel

Red lines - bearish divergence

The US dollar index is testing the channel support. The stochastic has produced a bearish divergence that I've called out a couple of sessions before and that has increased our cautiousness. As I said before, this is the time for US dollar bulls to take profits and raise their stops. The US dollar index is expected to make a downward correction towards at least 97.50.

The daily chart shows how the price managed to reach the previous highs and resistance area of 100-101. A rejection here is very possible taking into account the bearish wedge pattern, which we can see in the daily chart above. The daily stochastic is at overbought levels and the index should reverse and break down below the wedge towards the kijun-sen (yellow indicator).