FXStreet (Bali) - JP Morgan FX Strategists offered their technical outlook on DXY, noting that while the reversal from the medium term range lows is intact, a break through the 80.09/81.14 is necessary to confirm a more sustained advance.
"Despite signs of an improved backdrop, the broad USD picture remains mixed as rallies continue to struggle. While important hurdles are holding, we continue to see potential for the bullish story to develop in the coming weeks and months. In line with the upside view, the reversal from the May lows continues to stand out as the critical bullish factor. Again, this followed the effective test and hold of several critical support levels including the 79/78.60 area for the DXY, the 83.60 zone for the JPM USD Index, as well as the 1.38/1.40 zone for EUR/USD. While intact, the potential bullish risks for the USD are expected to prevail as the focus stays on the next line of key resistance levels."
"In turn, the focus stays on the DXY and the critical 80.90/81.14 resistance area. This area includes the June highs and the 38.2% retracement of the decline from the 2013 peak. Upside breaks imply the onset of another up- leg to the developing advance from the May low. Also, note that the JPM USD Index should continue to find solid support in the 83.60/40 zone which represents the 76.4% retracement of the rally from the October ’13 low and should be a max for any deeper pullback. The 84.70 resistance zone which includes the June/April highs should define whether an important low is in place and a deeper retracement to the decline from the February peak is underway - still the preferred view."