USD Index: Defense of key 109/108.70 support can trigger rebound – SocGen

The US Dollar Index recently faced stiff resistance at 114.80. This test has stalled the uptrend resulting in a sideways consolidation. DXY could test 113.90 if manages to hold the 109/108.70 support, economists at Société Générale report.

Risk of short-term downtrend on a break under 109/108.70

“The ascending trend line since February at 109/108.70 which is also the 23.6% retracement from 2021 is expected to be first important support. Defending this can lead to a rebound towards recent lower high at 113.90. Overcoming it would mean next leg of uptrend towards 117 and 2001 high near 121/122.”

“If DXY breaks and establishes below the support near 109/108.70, there is a risk of a short-term downtrend. In such a scenario, next potential objectives could be at 107.60 and May high of 105.”