The US dollar is likely to be more stable in 2023, after two years of strong bullishness. The Credit Suisse strategists see further dollar weakness in first quarterfollowed by the creation of a wide range environment.
Further USD weakness in Q1, followed by a wide range
For the DXY, we expect a test of a cluster of supports in the 102.99/101.99 zone: the March 2020 high, the 50% retracement of the 2021/2022 uptrend, and most importantly, the bottom 2017/2022 five-year bullish “triangle” pattern. So we look for the DXY to find a significant bottom here.”
“Our bias is that this will not be the start of a new move that takes the USD back to its 2022 highs, but rather a recovery into what we view as a wider sideways range that we believe could dominate the entire year, especially considering we just had two years of strongly trending markets.”
“The Immediate resistance for a recovery is seen at 105.80/106.00. Moving above should further reinforce a range trading environment, with resistance next seen at 107.68/108.00, potentially as far as 110.00/110.45.”
“If the weakness extends below 101.30, this would warn of further weakness towards 99/98.98potentially even back to the 38.2% retracement of the entire 2008/2022 uptrend at 97.94.”
Source: Fx Street
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