US Dollar Index now focused on 94.00 – UOB

Quek Ser Leang at UOB Group’s Golbal Economics & Markets Research assesses the prospects for the US Dollar Index (DXY).

Key Quotes

“About 2 months ago (18 Jun), when USD Index was trading at 92.30, the title of our Chart of the Day update was ‘Anticipating a break of the 55-week exponential moving average (currently at 92.55). A weekly close above this level would greatly increase the odds for USD Index to advance to the April’s high at 93.44’.”

“While our anticipation for a break of the 55-week exponential moving average was not wrong, USD Index was unable to make much headway on the upside, even after closing above the moving average. However, this week, USD Index stages a strong advance and it has just edged above 93.44 earlier. The breach of 93.44 (while not confirmed by a weekly closing just yet) is accompanied by a rapid build-up in momentum and further USD Index strength appears likely within these couple of months.”

“The next resistance level of note is at 94.00 (55-month exponential moving average, not visible in the chart above). At this stage, it is a bit too early to expect USD Index to advance towards the Sep 2020 high of 94.74. All in, the “consolidation phase” over the past two months appears to have ended and the next up-leg in USD Index has likely started. Only an unlikely break of 91.80 would indicate that USD Index is not ready to head higher.”