Saad Ullah
⬤The US Dollar Index is showing a short-term retracement setup after a sharp drop on the 4-hour chart. Having declined from above the 100 level, the index now trades around 99.50. A weekly fair value gap sits just above current price near 99.8-100.0, created during the recent sell-off when price moved too fast to fill orders cleanly. That imbalance zone is the near-term retracement target before any broader continuation.
⬤The chart structure shows DXY rejected from a resistance area near 100.2-100.4 before declining aggressively. The projected path points into the fair value gap, after which another rejection is expected. This pattern fits recent behavior: the index already pulled back from the 99.50-99.60 zone after failing to hold higher levels, reinforcing that area as a key reaction point rather than a launchpad.
⬤The bigger picture remains bearish. Previous DXY rebounds have proven short-lived, with lower highs reinforcing downside momentum each time. The current corrective bounce follows the same script: temporary recovery into an imbalance zone, then continuation. The fair value gap here is a retracement target, not a reversal signal.
⬤This puts DXY at a technical crossroads where short-term recovery and trend direction collide. How price interacts with the weekly fair value gap near 99.8-100.0 will likely define near-term action. Given that DXY structure shifts ripple across risk assets and currency pairs, this zone carries weight well beyond the dollar itself.
Saad Ullah
