The U.S. dollar index was seen posting a moderate correction last week.

The decline in the USD came amid a weaker than expected inflation report.

After price action nearly rallied to the highs of mid-August 2018, price action quickly reversed the momentum easing back and posting a lower high.

While we expect to see further declines in store, there is scope that the greenback could potentially post a rebound once again as it tests the familiar support level near 94.34 – 94.13 level.

A breakdown below this support level is needed in order for the USD index to confirm a correction to the downside.

We maintain the medium term view that the USD index is likely to correct toward the 90.87 level of support which previously served as resistance.

A retest of support at this level could potentially signal a rebound.

However, the price action is expected to stabilize and trade within the range of 90.87 through the resistance level of 94.13.

In the near term watch for the USD index to break the support level.

Next week, the Federal Reserve will be releasing its monetary policy meeting minutes. This could potentially act as a catalyst.

A hawkish outcome with some surprises could potentially move the USD in the coming week.