US Dollar Index: Extra gains expected on a close above 93.40 – UOB
|Quek Ser Leang at UOB Group’s Global Economics & Markets Research assesses the recent price action in the US Dollar Index (DXY).
Key Quotes
“About 3 weeks ago, on 08 Mar 2021, when USD Index was trading at 92.05, we highlighted…that ‘the strong boost in momentum coupled with the break of the key resistance at 91.75 suggests that USD Index is likely to strengthen further within these couple of months”. We added, ‘overbought shorter-term conditions could slow the pace of any further advance and the next resistance at 93.50 (55-week exponential moving average) may not come into the picture so soon’.”
“While our view was not wrong as USD Index strengthened as expected, the pace of the advance has been more rapid than expected. USD Index is quickly approaching the 55-week exponential moving average (currently at 93.40) and at the current level of 92.94, it is poised to post its largest 1-month gain since July 2019. In view of the robust upward momentum, a break of 93.40 would not be surprising and a weekly closing above this key resistance would greatly increase the odds for further USD Index strength in the coming months. The next resistance level of note is at 94.30. Support is at 92.00 but only a break of 91.35 would indicate the risk for further USD Index strength has dissipated.”
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