Economists at Credit Suisse see scope for a pause in the US Dollar Index around key technical levels. However post this pause, there is scope for a deeper short-term selloff in the USD.

DXY decline is showing signs of stalling

“The DXY decline is now showing signs of tiring around key support at 101.99/30 – the 50% retracement of the 2021/2022 uptrend and May 2022 low. We continue to look for this to hold for now and for a consolidation recovery phase to emerge.”

“Bigger picture, whilst our original scenario going into the start of this year was to look for a floor above 101.30, we now believe this will be only a temporary floor (if indeed even seen), ahead of further weakness to 99.82/37, then the 50% retracement at 98.98.”

“Above 102.90 is needed to add weight to the potential for a pause, with resistance then seen next at 103.49, before the 55-day average, now at 104.95, which we look to be tough resistance.”