DXY: A move to 2021 lows appears premature – UOB
|Quek Ser Leang at Golbal Economics & Markets Research reviews the prospects for the US Dollar Index (DXY).
Key Quotes
“In our Chart of the Day update from a month ago (30 Mar 2021), when USD Index was trading at 92.94, we were anticipating a break of the 55-week exponential moving average (at 93.40 then). We highlighted that “a weekly closing above this key resistance would greatly increase the odds for further USD Index strength in the coming months”. USD Index subsequently advanced a few pips above the moving average (high of 93.44) before making a swift and sharp turnaround. Not surprisingly, weekly MACD has weakened but currently, it is still in positive territory.”
“While the sharp retreat from the moving average has shifted the risk to the downside, it is premature to expect USD Index to move to the early Jan low of 89.21. To look at it another way, we do not view the current weakness as a resumption of the USD downtrend that started last year. That said, USD Index could dip below the rising trend-line support (currently at 90.25) 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. All in, USD Index is expected to stay under pressure unless it can move back above 92.50. Higher up, the 55-week exponential moving average is still acting as a key resistance (currently at 93.17).”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.