The US Dollar Index (DXY) has completed a top and looks likely to head down over the next few weeks, according to David Sneddon and James Gilbert at Credit Suisse in London.
Sneddon and Gilbert say the DXY has completed a minor head-and-shoulders top after its rejection of the October high at 95.15 and a break through the 93.68/61 neckline, turning the medium-term outlook bearish (see Chart).
They see a cluster of important supports at around the 92.44/00 level, comprising: i) the 38.2% retracement of the recent rally; ii) the 200-day moving average; and iii) the measured objective from the head-and-shoulders top. Sneddon and Gilbert say this level would need to hold in order to turn the DXY back higher. If it breaks, however, they say a recovery would look doubtful and the next important support level would be at the 61.8% retracement level at 91.00/90.76.