US Dollar Index: Extra gains seen above 94.74 – UOB
Quek Ser Leang at UOB Group’s Global Economics & Markets Research comments on the potential upside in the greenback.
Key Quotes
“When USD Index rose above April’s high of 93.44 in mid-August, we highlighted in our Chart of the Day (19 Aug, spot at 93.45) that “the next up-leg in USD Index has likely started”. We added, “only an unlikely break of 91.80 would indicate that USD Index is not ready to head higher”. Our expectations for USD Index to head higher did not materialize as it dipped to 91.95 before rebounding.”
“Upward momentum has improved considerably and USD Index is likely to strengthen further even though strong resistance can be expected at 94.74 (high in September last year). That said, in view of the robust momentum, we are anticipating a break of 94.74. A clear break of 94.74 would increase the odds for USD Index to move above the top of the weekly Ichimoku cloud (currently at 95.00). Note that USD Index has stayed below the cloud since May last year.”
“In order to maintain the current strong momentum, any pullback should ideally hold above 93.20. However, only a break of the key support at 92.60 would indicate that the upside risk has dissipated. Looking ahead, if USD Index closes above the top of the weekly Ichimoku cloud, it could presage a period of USD Index strength in the months ahead.”
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.
