Quek Ser Leang at UOB Group’s Global Economics & Markets Research, assesses the outlook for the US Dollar Index (DXY).
Key Quotes
“In our Chart of the Day from 29 Apr 2021 (when USD Index was trading at 90.60), we highlighted that ‘USD Index is under pressure, but it is premature to expect a move to the year-to-date low at 89.21’. We added, USD Index ‘could dip below the rising trend-line support but only an unlikely weekly closing below the Feb’s low of 89.68 would suggest that the year-to-date low at 89.21 is at risk’.”
“USD Index broke the rising trend-line support about 2 weeks ago, rebounded but over the past few days, it staged a rather swift and impulsive decline and is currently holding just above 89.68. Weekly MACD is turning negative and the improved downward momentum suggests that a breach of 89.68 would not be surprising and would indicate that USD Index is heading towards the early January low of 89.21. That said, for USD Index to move to 89.21, it has to maintain the current rapid pace of decline and should not move above the declining trend-line resistance (currently at 90.65). Looking ahead, the next support below 89.21 is at 88.85 followed by the 2018 low of 88.25.”
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