US Dollar Index: Further gains expected above 92.55 – UOB

Quek Ser Leang at UOB Group’s Global Economics & Markets Research noted DXY could see its upside accelerated on a breakout of the 92.55 level.

Key Quotes

“In our Chart of the Day from 19 May 2021 (when USD Index was trading at 89.75), we expected USD Index to ‘head towards the early January low of 89.21’. We highlighted, ‘for USD Index to move to 89.21, it has to maintain the current rapid pace decline and should not move above the declining trend-line resistance (currently at 90.65)’.”

“While USD Index subsequently dropped to 89.54, it turned around and not only broke the trend-line mentioned above but last week, it also cracked the major trend-line connecting March 2020 high (102.99) and this April’s high of 93.44. The strong surge resulted in a whopping weekly gain of +1.84%, its largest 1-week advance in about 9 months.”

“Weekly MACD has flipped back into positive, and USD Index is currently holding not far below the 55-week exponential moving average (currently at 92.55). While the moving average thwarted the advance in USD Index in April, the strong surge in momentum this time around suggests that a break of 92.55 is likely. A weekly closing above 92.55 would greatly increase the odds for USD Index to advance further to 93.44 within this couple of months. Note that USD Index has stayed below the 55-week exponential moving since June last year. Support is at 91.50 but only a breach of 90.85 would indicate that our expectation for a stronger USD Index is wrong.”