The US Dollar Index (DXY) is breaking below its 103.50 yearly open, signaling a deeper pullback for the dollar.
I’ve written about this level several times, noting how it was a must-hold level for dollar bulls.
However, the 103.00 support area is one to watch.
Not only is it a key horizontal level, but it’s also the bottom of a descending channel from the May 25th low.
Notice how the 103.00 horizontal level and channel support intersect within the next 24-48 hours.
That could be a significant support area for the DXY on Friday.
So if you’re trading major currency pairs like EURUSD, GBPUSD, etc., you’ll want to pay close attention to the area between 102.90 and 103.00.
But a bounce from the 103.00 area wouldn’t mean dollar bulls are out of the woods.
Remember that 103.50 is the yearly open, so a reclaim there on Friday or sometime next week will be essential for the dollar rally to continue.
Otherwise, we could see a continued pullback from the DXY toward 102.20.
Until then, I’ll anticipate a bounce from the 103.00 region.