BBG DXY set for a retest of pivotal long-term support at 1112/06 – Credit Suisse

The Bloomberg Dollar Spot Index is set for a retest of pivotal long-term support at 1112/06, including the 2018 and YTD lows. Whilst analysts at Credit Suisse look for this to hold again for now, they acknowledge that downside risks to the USD are growing and note that a weekly close below this level would mark a multi-year top for the USD on a broad basis.

Sustained break of 1112/06 to mark a multi-year “double top” and bear market

“The BBG DXY has completed a bearish ‘outside week’ to mark a further deterioration and the spotlight turns back to major support at 1112/06 – the 2018 and YTD low and 50% retracement of the entire 2011/2020 bull trend. Whilst bearish pressure is clearly seen building steadily, we will look for a fresh hold here for now.” 

“A close below 1112/06 though would mark a highly significant change and break to the downside as this would see a multi-year top complete to suggest the USD is then in a major bear market with support then seen at 1060/56 initially, the 61.8% retracement of the 2011/2020 bull trend.”

“Above resistance at 1135/37 is needed to ease the immediate downside bias for a move back to retest the 200-day average at 1147. Only a close above here though would rekindle thoughts of a major sideways phase.”