ReachX logo

Catalyst for large Dollar Index decline still awaited

Publication Date: 05 Apr 2019 - By ReachX Team By ReachX Team
Actionable
Differentiated

FX & Rates FX Multi Asset USA EU ex-UK UK

Late on in 2018, the Dollar Index came up against the crucial hurdle at 97.90/98.10 representing the highs of June 2017, and the 61.8% retracement of the correction since 2017 peak. 

Multiple attempts at overwhelming this resistance have turned out to be futile, say analysts at Société Générale

In a note to clients, Stephanie Aymes, Tanmay Purohit and Natarajan Visweswaran, analysts at the French investment bank, said the index appears to be evolving within a possible Double Top which denotes the up move has been running out of steam lately and symptoms of a correction to come. Thus, 97.90/98.10 will remain a critical resistance level. 

“Since 3Q18 the index has been in a wait-and-see mode with price action framed by a moderately ascending channel. It recently revisited the lower band of that channel and the 200-DMA (now at 95.97/95.60) giving way to a laborious and choppy rebound bringing it once again towards above-mentioned hurdle of 97.90/98.10. 

“The upside appears to remain contained however symptoms of a large decline are still awaited. 96.62/96.42 is an immediate support while the channel near 95.97/95.60 will decide if an elongated correction takes shape,” they added.

(Insert 1)

Rebound in EUR/USD recently petered out, they added, after flirting with the median of the channel since last year and the 200-DMA (1.1450/1.1517). Undergoing a slow correction consisting of overlapping waves, EUR/USD has once again reached the support zone at 1.1187/20 representing the 61.8% retracement from 2017 low.

“This remains a crucial level. Only a definite break below will mean possibility of the next leg of down move. Short-term, an initial recovery is being witnessed and EUR/USD could form a potential weekly Doji which denotes opening price and closing price have remained unchanged through the week. This shows indecision among market participants however a change in trend is still awaited.” 

1.1285/1.1316 are initial resistance levels while recent peak at 1.1450/1.1517, also the 200-DMA is a decisive resistance which must be reclaimed for symptoms of a large rebound, the SocGen analysts concluded.

Disclosure:

I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

ReachX Team

 

Most read

ReachX
1-15 Clere Street, EC2A 4UY
London, United Kingdom
info@reachx.co
ReachX
1-15 Clere Street, EC2A 4UY
London, United Kingdom

info@reachx.co
Sign up to our newsletter