The dollar index (DXY) is retreating from the 4-week highs reached yesterday and early in today's European trading session near 103.67: as of writing, DXY futures were trading near 103.41.

The strengthening of the dollar and the growth of its index was facilitated by the strong report of the U.S. Department of Labor published last Friday with data for January.

Immediately after the publication of this report, the dollar strengthened sharply, and its DXY index closed the trading day on Friday at around 102.75, 2% above the local 10-month low of 100.68, reached the day before the publication. However, according to economists, this is still not enough for the dollar to reverse the negative trend.

A breakdown of today's local low at 103.37 may become the first earliest signal to resume short positions on DXY (CFD #USDX in the MT4 trading terminal), and a breakdown of important short-term support levels 103.12 (200 EMA on a 4-hour chart) CFD #USDX, 102.37 (200 EMA on 1-hour chart) might be a confirmation.

In case of further decline, the targets will be the key support levels 100.00 (144 EMA on the weekly chart), 98.75 (200 EMA on the weekly chart). The breakdown of the 93.00 long-term support level (200 EMA on the monthly chart) will confirm the final return of the dollar and its DXY index to the global downward trend zone.

Alternatively, after the breakdown of the resistance levels 103.85 (50 EMA and the upper line of the downward channel on the daily chart), 104.00 (50 EMA on the weekly chart), DXY will resume growth, heading towards the key resistance levels 104.75 (200 EMA on the daily chart), 105.25 (144 EMA on the daily chart). Their breakdown will confirm the scenario of DXY returning to the long-term bull market zone.

And today, market participants who follow the quotes of the dollar will carefully listen to the speech of Fed Chairman Jerome Powell at the Economic Club of Washington. It will start at 17:40 (GMT). Powell could "swing" the dollar up or down today.

"By many measures, the labor market is extremely tight," Powell said recently.

If Powell does not touch upon the issues of the monetary policy of the U.S. central bank, then the reaction to his speech will be weak.

Support levels: 103.37, 103.12, 103.00, 102.37, 101.46, 101.00, 100.00, 98.75

Resistance levels: 103.85, 104.00, 104.75, 105.25, 107.80, 109.25

Trading scenarios

Sell Stop 103.30. Stop-Loss 104.10. Take-Profit 103.12, 103.00, 102.37, 101.46, 101.00, 100.00, 98.75, 93.00

Buy Stop 104.10. Stop-Loss 103.30. Take-Profit 104.75, 105.25, 107.80, 109.25