US Dollar Index Price Analysis: Technical correction could extend further

• DXY fades initial gains to the 113.80 region on Thursday.
• Further downside appears in store in the very near term.

DXY looks to reverse part of Wednesday’s sharp pullback, although the bullish attempt seems to have met a tough resistance near 113.80.

Despite the bounce, further decline remains in the pipeline for the dollar. Against that, the corrective leg lower could extend to the weekly low at 109.35 (September 20) ahead of the 55-day SMA at 108.41.

On the broader scenario, prospects for extra gains in the dollar should remain unchanged as long as the index trades above the 7-month support line around 107.10.

In the longer run, DXY is expected to maintain its constructive stance while above the 200-day SMA at 102.38.

DXY daily chart