DXY: Significant move lower requires major shift in longer term rate differentials against USD – Scotiabank

USD losses extend for a second day. Economists at Scotiabank analyze Greenback’s outlook.

Technical signals turn negative

We have been due – or overdue – a correction on the strong Dollar trend and while price action suggests that may well be happening, USD losses could simply reflect temporary month and quarter-end flows.

A significant move lower in the USD generally will very likely require a major shift in longer term rate differentials against the USD.

As things stand, the DXY is just about clinging on to an 11th, consecutive weekly gain but well off its high. A low close on the week would signal the risk of more USD losses from a technical point of view at least.