USD: This Pattern Happened Only For USD 5 Times Since

The US dollar is clearly on the back foot. Is the rebound coming? Not necessarily:

Here is their view, courtesy of eFXnews:

Bank of America FX Strategy Research notes that  on the surface, the path of least resistance appears to be for a weaker USD as we head into an important week  for US data which includes the ISM and non-farm payrolls.

However,  on a deeper look, BofAML notes that  there are strong emerging signs that this recent move is becoming exhaustive.

In particular, BofAML  highlights  that as the USD has finally reached oversold levels for the first time in over a year,  the currency has also descending against all of G10 pairs in the process, noticing that this pattern has happened only five times since 2012 and tends to promptly reverse.

“The dollar may also struggle to make a sustained break below its 200-week moving average particularly as US data surprises have continued to improve through July at the same time as the currency falls.

Furthermore, the BBDXY index exhibits a seasonal tendency to rally on average each month into year-end, with November particularly strong over the past year,” BofAML adds.  

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.