The Dollar is now close to oversold levels and a rebound could be overdue – SocGen

Market news

21 November 2023

The Dollar is now close to oversold levels and a rebound could be overdue – SocGen

The 1.8% decline in the US Dollar Index (DXY) last week was the largest since the second week of July. Economists at Société Générale analyze Greenback’s outlook.

DXY at risk of a deeper retracement towards 102.55

A close below the 200-DMA (103.62) put the DXY at risk of a deeper retracement towards 102.55.

In the most bearish tactical case, a decline towards 100 could follow if real yields keep falling towards 2% and nominal 10-year UST breaks below 4.36%/4.33%. However, the Dollar is now close to oversold levels and a rebound could be overdue.

The question is whether a rebound in Oil prices (Saudi/ OPEC+ production cut extension) would negate confidence of a soft landing in the US economy and speculation of a first rate cut in 1H24 which explains Dollar profit taking.

EUR/USD: Gradually heading towards 1.1065/1.1080 – SocGen

Germany 5-y Note Auction declined to 2.56% from previous 2.71%

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