The USD Index surge higher last week, leaving the market critically poised beneath key resistance from the top of its nine-month range at 81.14/81.48, notes Credit Suisse.
"Although this remains a formidable barrier, and should clearly be respected, above 81.48 would suggest an important base has been established, and a more significant bullish phase can emerge," CS argues.
"If achieved, we would target 81.83 initially, then 82.52/67 – the late September 2013 high and 61.8% retracement of the 2013/2014 downtrend. The measured target from the base would be seen higher at 83.48," CS adds.
What CS additionally find important is that we are seeing noticeable signs of USD strength elsewhere, in NZD/USD and USD/CAD, but also USD/CHF.
"Of most interest though is EURUSD, where, as we recently highlighted, we have seen a medium-term bearish reversal complete. A base in the USD should clearly help this trade, and we thus maintain our 1.3248 and then 1.2755 targets," CS projects.
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