The USD is facing a big test at key long-term support, according to David Sneddon and his team at Credit Suisse in London.

Sneddon says the USD has weakened sharply again and the Bloomberg Dollar Spot Index (BBG DXY) is near key long-term support at 1194/83, which comes from, i) the long-term uptrend from 2011, ii) the series of lows seen through 2019 and early 2020, and iii) the 61.8% Fibonacci retracement of the 2018 to 2020 bull trend (see Chart). Whilst his bias for the USD stays lower for an eventual break, he thinks this level will be a significant challenge to remove and near-term volatility and consolidation should be now expected. However, an eventual move below 1183 would see a major top established to suggest further material weakening of the USD. Sneddon would then expect BBG DXY to target support levels at 1177, ahead of 1150 and eventually 1138.

See Chart.