A short-term top has completed for the Bloomberg Dollar Index (BBG DXY) and if EURUSD can now break above 1.1500 it can go on to target the 200-day moving average at 1.1644, according to David Sneddon, Pascal Zingg and James Gilbert at Credit Suisse in London.
Sneddon and his team point out that BBG DXY has extended its rejection of the 61.8% retracement of the 2017 to 2018 downtrend to set a top below 1192 (see Chart 1). This warns of further short-term USD weakness, with support next seen at the 200-day moving average at 1181/80, then the 38.2% retracement of the 2018 rally at 1175.
In EURUSD terms, they say a weaker USD increases the prospect of a base forming, with an initial target of 1.1644 (the 200-day moving average). Only a move above 1.1500, however, would confirm this scenario as likely (see Chart 2).