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USD Analysis and Talking Points

  • USD looks to make a test at key resistance
  • Trend signals suggest scope for further USD gains, albeit marginal

See our Q3 FX forecast to learn what will drive major currencies throughout the quarter.

USD Eyes June Double Top

As the US Dollar basket yet again approaches the 95.00 handle, eyes are back on the familiar resistance, which has previously capped its rise. This is situated at 95.20, which had curbed further gains for the DXY on June 21st and 28th. The question is, will it hold again?

Trend signals suggest that there is scope for additional gains in the USD. RSI indicators on a daily timeframe is just shy of moving into the overbought area, subsequently, signalling that a continued USD rise will likely be limited. Alongside this, momentum indicators have moved into positive territory, showing slightly positive signs, however, progress is needed.

Short term resistance at the 94.76 level, which marks the 76.4% Fibonacci Retracement level of the 94.20-93.33 fall is holding up for now. However, a break above this could set the DXY on course for a retest of the June double top.

US Dollar Price Chart: Daily Time Frame (March 2018-July 2018)

USD Technical Analysis: DXY at Familiar Resistance Yet Again, Will it Hold?

Chart by IG

Speculative Positioning Indicates Modest USD Upside

CTFC speculative positioning have shown that net USD longs are currently around the highest since May 2017, which equate to $15.303bln. Consequently, this suggests that upside in the US Dollar is modest from current levels.

USD Technical Analysis: DXY at Familiar Resistance Yet Again, Will it Hold?

Source: Thomson Reuters (CTFC FX Speculative Positioning)

--- Written by Justin McQueen, Market Analyst

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