USD index was in big sideways pattern unfolding since start of 2015; slow and overlapping price action with a personality of a contra-trend movement that looks completed. We see it partly as a flat correction in black wave IV; a three wave structure where final wave C should be made by five waves. Well, we have seen a nice decline from November of 2015 counted in five legs, but as an ending diagonal as shown on a daily chart. That's a reversal pattern that already caused a strong bounce in May, so ideally recent turn down was just a temporary pullback within a new ongoing uptrend labeled as blue wave 2-circled.
That said we are now looking at a bullish scenario, with more upside to follow into blue wave 3 to around the 138.2 or 161.8 Fibonacci projected zone. If for any reason price will break beneath the 95 area, then the correction in blue wave 2-circled will be back in play.
USD Index, Daily
On the lower time frame we can see that USD index is back at the highs as EURUSD broke lower last week, so we see index back in bullish mode. An updated wave structure on 4h shows idea of an extended wave 3) headed up to 99.00 area this month.
USD Index, 4H