USD Index: Higher Real yields may see the recovery extend further – Credit Suisse

The USD continues to recover strongly as US Real Yields rise. Analysts at Credit Suisse see scope for further strength in the US Dollar Index (DXY).

Break above 105.88 would warn of a more sustained trend higher

With 10yr US Real yields having completed a large bearish continuation pattern and expected to rise further, this has helped the DXY rally extend for a break above key resistance at its 200-DMA and July high. This is seen to clear the way for further USD strength, with resistance seen next at 104.70 ahead of the 38.2% retracement of the 2022/2023 downtrend and YTD high from March, seen at 105.38 and 105.88 respectively. Our bias would be for 105.88 to cap to define the top of a broader range.

Above 105.88 though would instead worryingly warn of a large base for the USD and a more sustained trend higher. 

Below support at 103.01 is now seen needed to ease the immediate upside bias, but with a break below 101.78/101.74 seen needed to reassert a negative tone again for a fall back to 100.55, then the 99.58/99.50 current cycle lows.