• USDX corrects to the downside after getting overbought

•  Set to test 38.2%% Fibonacci retracement of the 114.71-99.19 downleg

• Will the index continue to respect Fibonacci levels?

The US dollar index (December Futures) has been undergoing a correction since its rejection at the 50.0% Fibo of 106.95, which was also a 10-month high. However, it’s too early to call for a trend reversal as the price is trading way above both its ascending 50- and 200-day simple moving averages (SMAs).

Should sellers attempt to push the price lower, the 38.2% Fibo of 105.12 could be the first obstacle for the price to overcome. Dipping below that level, the index could descend towards the 23.6% Fibo of 102.85. Further declines could then cease at the 2023 bottom of 99.19.

On the flipside, if the pullback proves to be short-lived and the price reverses higher, immediate resistance could be met at the 50.0% Fibo of 106.95. Jumping above the latter, the dollar index could then test the 61.8% Fibo of 108.78. Even higher, the 78.6% Fibo of 111.39 may curb further upside.

Overall, the US dollar index appears to be under pressure after its latest advance reached overbought conditions. Even though momentum indicators are pointing to more losses, there is a long way till the short-term picture turns back to bearis