I think the US Dollar index is about ready to start a strong uptrend. However, I would like to see a rally to 80 or higher in the next week to confirm this pattern.
Notice in the upper frame of the daily chart above that price is standing at an uptrend support line. Also, it appears that price action has traced out a flat ABC correction since the Dec. 2008 top (notice the clear 3-3-5 formation). It looks like Wave-v of Wave-c appears to be an ending diagonal, so today's drop in the USD should quickly reverse if my analysis is correct. Also, commercial traders are holding their largest long position in the past year.
All these bullish factors are mitigated by the fact that retail traders are super-long USDl. I need to see the reversal quickly, otherwise the bullish sentiment from retailers could cause it to drop quickly.