US dollar bears take over, but upside potential eyed ahead of Fed

• US dollar bears are moving in at the start of the week. 
• The bulls will seek a break of the M-formation's tops with the Fed eyed.

The US dollar will be a major focus in markets this week in the countdown to the Federal Reserve. The greenback attempted a breakout to the upside but failed to pick up any lasting commitment from the bulls and is now in the hands of the bears for the open. The greenback did however register a gain for the week as traders remain in anticipation that the Fed will stick to its aggressive rate hiking policy when the Federal Open Market Committee's board members meet to agree on the next rate hike.

The US dollar measured against a basket of currencies as per DXY, declined 0.1% on the day to 109.68. It reached a two-decade high of 110.79 earlier this month. For the week, it was up 0.6%, and it is up about 15% for the year so far. On Monday just ahead of the Tokyo open, the index is down 0.13% to 109.508 so far.

DXY daily and H1 charts

The price has rallied hard and broken through prior resistance that is now acting as support on the daily chart. However. it could bleed out some more into a 38.2% Fibonacci retracement as illustrated prior to the next bullish impulse.

The hourly chart's M-formation shows that the price is indeed headed lower in the open which solidifies the meanwhile bearish bias.