Pullback imminent for USD

Divergences on the US Dollar Index (DXY) and EUR/USD warn that a short-term correction might be around the corner, according to George Davis, Chief FIC Technical Analyst at RBC Capital Markets.

Davis says that his cross asset analysis continues to flag more risk averse investor behaviour, which argues for additional USD strength. However, divergences on the DXY (Chart 1) and EUR/USD (Chart 2) warn that a short-term correction might be imminent and that these corrective pullbacks in the USD could be viewed as a buying opportunity. The exception to this view is USD/JPY (Chart 3).

See Chart 1 / Chart 2 / Chart 3.