US Dollar Index Price Analysis: Technical correction in the offing

• DXY comes under pressure after hitting new cycle tops.
• Overbought conditions should prompt a technical move.

DXY climbs to new nearly 20-year peaks around 108.60 on Tuesday, although it loses some ground afterwards.

Further upside in the dollar remains in store in the short-term horizon, with the next target at the October 2002 top at 108.74. However, overbought conditions could spark a technical correction to, initially, the June post-FOMC high at 105.78 (June 15).

As long as the index trades above the 5-month line around 103.00, the near-term outlook for DXY should remain constructive.

In addition, the broader bullish view remains in place while above the 200-day SMA at 98.59.

DXY daily chart