The US Dollar Index (DXY) rallied initially following Wednesday’s Fed rate decision and press conference but has fallen back today.
Not only has it fallen back, but the dollar index is also below the channel support I’ve mentioned.
That means dollar bulls must reclaim the bottom of the channel for the DXY to turn bullish again.
It also means the 102.20 support area is a must-hold level for bulls.
A sustained break below 102.20 would be bearish for the DXY, putting the index back in the 100.80-102.20 range.
In other words, 102.20 is the last chance for the DXY to stay constructive and avoid carving a lower high this year.
I will stay cautiously bullish on the dollar while it’s above 102.20.
However, as mentioned above, the DXY must reclaim the bottom of the late-May channel to turn constructive again.
If they can do that, I’ll turn aggressively bullish on the dollar, as I was during the second half of May.
Until then, I’ll wait to see if 102.20 support holds.
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