US Dollar (DXY) – Waiting for an Opportunity to Sell the US Dollar

US Dollar Analyst Pick – Look to Sell Rallies

• Any rally in the US dollar is likely to be short-lived.
• Lower highs have dominated the DXY chart since the start of November.

My analyst pick for the fourth quarter was to sell the US dollar (DXY) into any rally nearing the 107 level. The dollar index rallied at the start of October, hitting 107.36 before turning lower, and aside from a brief pop higher at the start of November, the US dollar has fallen back to lows last seen in late-August.

US Dollar – Is The Rally Coming to an End?

Since we published the above article, the US rates market has completely wiped out any chance of a further US interest rate hike, despite cautious words from Fed Chair Jerome Powell. Looking at the latest CME FedFund probabilities, the market is pricing in the first 25 basis point rate cut in May next year, followed by two, or three more similar cuts by the end of the year.

In what may be a case of déjà vu, I again would look to sell any rally in the US dollar. Looking at the daily chart, the DXY is currently trading at 103.75 and is trapped between two Fibonacci levels – the 50% retracement at 103.41 and the 38.2% retracement at 104.34. The 200-day simple moving average is currently providing support at 103.50. If the DXY can break above 104.34, and maybe even test prior horizontal resistance at 104.66, then this may offer an area to scale into a short position. A break of support could see the DXY eventually re-test the 102.49 level (61.8% Fibonacci retracement). As before, it is difficult to sell into rallies, so a stop loss should be used around 105.00.

US Dollar Index Daily Price Chart – November 23, 2023

Chart using TradingView

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.