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Quek Ser Leang at UOB Group’s Global Economics & Markets Research assessed the prospects for the US Dollar Index (DXY).

Key Quotes

“USD Index dropped sharply to a low of 98.27 in late March, rebounded quickly to 100.93 and then traded between these two levels for close to two months. USD Index cracked 98.27 last Friday (29 May) and the break was ‘confirmed’ when it closed below this level on Monday (01 Jun). The break of the solid support level is accompanied by a rapid pick-up in downward momentum and moving averages appear to have staged a ‘bearish crossover’. In other words, USD Index could continue to head lower from here.”

“The pace of any further USD Index decline could be relatively fast as the next support level of note is not until the rising trend-line on the weekly chart at 95.50 (level moving higher with time). That said, the current weakness is already entering oversold territory and for the next couple of months, the early March low of 94.65 is unlikely to come into picture. On the upside, the previous support at 98.27 is acting as a resistance now but the current negative outlook for USD Index is deemed as intact as long as the confluence of strong resistance levels at 99.30 is not taken out.”