Quek Ser Leang at UOB Group’s Global Economics & Markets Research reviewed the prospects for the US Dollar Index (DXY).
Key Quotes
“In our Chart of the Day from about one month ago, 23 Sep 20 (when USD Index was trading at 94.15), we highlighted that ‘the early September low of 91.75 is a significant bottom and this level may not come back into the picture within these couple of months’. We added, if USD Index were to break the critical resistance levels between 94.70 and 94.90, it could potentially lead to a relatively large corrective rebound.”
“USD Index subsequently rose as expected but was unable to break the top of the Ichimoku cloud at 94.90 (high has been 94.74). Since then, USD Index drifted lower and touched 92.47 last Wednesday (21 Oct). In other words, our expectation for a strong ‘corrective rebound’ did not materialize. Instead, we now view the current movement in USD Index as part of a consolidation phase and it could trade within September’s range of 91.75/94.74 for a period of time.”
“On a shorter-term note, the bias is tilted to the downside but momentum is not strong for now and the prospect for a clear break below 91.75 is low. On the upside, a break above 93.50 would indicate that USD Index could edge higher towards 93.90.”
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