The Dollar index continued its downward slide yesterday as expected but the longer-term trend remains bullish. The retracement was a shallow one and did not reach my target of 38%. 81.19 was the low that could now be used as a stop for bulls. Price remains inside the upward sloping channel. Short-term support is found at 81.19 and 81.30. If price breaks below 81.30, we should expect a move lower towards 81.10-81.05. The Dollar index has reached the Ichimoku cloud very close but not near the 38% Fibonacci retracement.

The decline from the highs is clearly corrective and we could have seen the end of it very well. Breaking above 81.40 could signal a buy that could bring the index back above 81.50 to test the previous highs.

The daily chart shows why the Dollar index is bouncing higher today. Price has reached the channel boundaries and there are many chances we do not see lower than 81.19 until we reach 81.75. So what to expect now? The trend is bullish and as I mentioned before, pull backs are to be bought. The trend will bring the index towards 81.75 which was my first target from 79.75.