Dollar's downside may remain open - BBH
|Analysts at Brown Brothers Harriman explained that the US dollar weakened against all the major currencies last week.
Key Quotes:
"We had anticipated that the greenback would start this past week on a firm note, but we thought that without much new data, and the stretched daily technical readings, the risk favored a pullback.
In our understanding, the widening interest rate differentials and the divergence of central bank policy continue to be the main driver of our constructive outlook. This is consistent with our reading of the weekly technical indicators. However, the daily technical indicators and the focus on the confusing and mixed signals emanating from the US Congress about tax reform warn that the dollar's heavy tone can continue into at least the early part of the week ahead.
The Dollar Index fell a little more than 0.5% last week, ending a three-week streak of gains. It was only the second weekly decline since the year's low was recorded on September 8. A two-week low was recorded before the weekend, but important support is in the 94.00-94.25 area. This area corresponds to the 20-day moving average, which the Dollar Index has not closed below in more than six weeks, and a trend line drawn off that September and October lows. A small double top may be in place near 95.15. The neckline is about 94.40. A convincing break would point to 93.75."
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