The currency pair decreased and has erased the morning gains. However, it should climb much higher if the USDX will drop a little on the short term. Unfortunately, the dollar index has found a very strong resistance and now is fighting to stay higher after the yesterday’s massive drop.

I’ve said in the previous week that the USDX may find a temporary resistance and could drop a little. We may have a major drop on the USDX only if the rate will make a valid breakdown below the 93.00 psychological level.

USDX failed to stabilize above the 94.00 psychological level and now is somehow expected to drop towards the 93.00 level because we could test and retest a dynamic support before will climb higher again.

The rate failed to make a valid breakout above the first warning line (wl1) of the minor ascending pitchfork, that’s why it could drop towards the ML of the major ascending pitchfork. I’ve said that it could approach and reach the WL1 of the descending pitchfork even if will stay below the wl1 as long as it stays above the ML and above the second warning line.

You can see that it has shown some exhaustion signs because we had several false breakouts in the last weeks.

I’ve said in the previous analysis that the rate should climb towards the second warning line (wl2) of minor descending pitchfork if it will stabilize above the median line (ML) and above the first warning line (wl1).

It remains to see how will react when will touch the wl2. A rejection will take place if the USDX will climb much higher again after a minor drop. Only a valid breakout above the wl2 of the descending pitchfork will confirm a further increase. The major upside target is at the UML of the major black descending pitchfork. The current rebound is natural after the failure to close near the sliding parallel line.