DXY risks a deeper retracement – UOB
In light of the ongoing performance, DXY faces increasing risks of a sharp pullback, suggested Quek Ser Leang of Global Economics & Markets Research at UOB Group.
Key Quotes
“USD Index (DXY) rose to a 29-month high of 99.67 in October before dropping back to end the month sharply lower at 97.35. The weak monthly closing is not only the largest 1-month decline in 21 months but is also an ‘outside reversal bar’. On the weekly chart, the decline took out the 20-month rising trend line connecting the low of 88.25 (Feb 2018) and the high of 99.67 (Oct 2019). The break of the strong rising trend line support coincided with weekly MACD crossing into negative territory”.
“All in, the above suggests 99.67 could be a significant top and the current price action is likely the early stages of a pull-back that appears to have ample room to extend lower. From here, the next weekly support is at 95.84 but the stronger support is further down at 95.02. On the upside, resistance is at 98.80 and we doubt the October peak of 99.67 would come back into the picture for the next several months”.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
