USD Index may be forming an important “double bottom” base – Credit Suisse

Analysts at Credit Suisse discuss US Dollar Index (DXY) technical outlook.

Looking for an eventual test of key resistance at 105.68/106.13

DXY continues to appreciate steadily following the completion of a near-term base above the 55-DMA and April high, itself on the back of the repeated successful defence of its 100.82 YTD January low. We are now also seeing a range of breaks of major levels across a range of USD crosses and with daily and weekly momentum positive we maintain our view the potential for a broad and large ‘double bottom’ continues to increase markedly. 

We continue to look for strength back to the March highs, 200-DMA and 38.2% retracement of the 2022/2023 fall at 105.63/106.13. Above here though stays seen needed to see a ‘double bottom’ reversal confirmed to open the door to a more sustained and material phase of USD strength with next resistance seen at 107.78/99. 

Support is seen at 103.88 initially, beneath which can see a pullback to the 13-day exponential average at 103.25. With price support seen not far below at 102.96 we would though look for a good floor here.