The USD has broken below key support and may have formed a top, according to Sejul Gokal, Chief Technical Strategist at GO-TechniKAL Insight.
Looking at a chart of the Bloomberg Dollar Index (BBDXY*), Gokal notes how it has broken below the bullish trend channel from June and the 100-day moving average (Chart 1), after having reached the 50% Fibonacci retracement of the 2017 decline (Chart 2). He sees this as part of a bigger picture; with emerging markets rallying, the re-emergence of a synchronised global growth theme and the move away from a safe-haven USD.
Gokal also points to the Commodity Futures Trading Commission (CFTC) report, which shows that USD leveraged positioning versus all the G10 currencies has turned to net long (see Chart 2). This also happened back in early 2017 just before a c. 12% fall in the index.
The abovementioned developments lead Gokal to strengthen his conviction of a top in the USD.
* See Bloomberg factsheet for explanation of BBDXY vs DXY
