US dollar index rebounds from 4-month lows, ends week sharply higher

The US dollar finished little changed on Friday and ended the week mostly in positive territory. The US dollar index rebounded sharply and it closed with a weekly gain of around 0.75%. 

The DXY rose after falling during three consecutive weeks. On Monday, it opened with a bearish gap and trading at the lowest since mid-November. Before turning to the upside, bottomed at 98.60.

It peaked on Friday slight below 100.50 and near the end of the week, it was hovering around 100.15/20, consolidating recent gains. It is the second best week for the DXY since the beginning of the year. 

Volatility could remain high in the forex market, taking into account that next week, in the US, the NFP report and the FOMC minutes will be released. 

US: Key events for next week - Danske Bank

Levels to watch 

The decline from multi-year highs that started in January of the US dollar index, found support on Monday above a 1-year uptrend line. A consolidation below the mentioned line could open the doors for an extension of the decline. 

The recent rally so far can be seen as a correction. But if DXY rises on top of 101.60, surpassing the 20-week moving average and a downtrend line from January highs, it would remove the medium-term bearish pressure.