“The momentum could be very strong going forward. This rally is taking place mainly against the EUR, JPY, SEK and CHF. They account for 79% of the DXY already. Chartwise, these currencies could have substantial downside against the USD. Fundamentally, the USD has a widening yield advantage. As such, we see plenty more upside above 100 for the DXY. In the past 35 years, there have only been 2 major breakouts: the first in 1981, when the DXY went on to rise by 60%, and the second in 2000 when it went on to gain 20%,” according to a Daiwa note posted by Shuli Ren of Barron’s.
Further supporting the U.S. dollar rally, the British pound has plunged to three-decade lows on fears of a so-called hard Brexit after U.K. Prime Minister told the Conservative party conference that Britain would trigger Article 50 – the official legal notification that would begin the exit negotiations with the European Union – “no later than the end of March.”
For more information on the USD, visit our U.S. dollar category.
PowerShares DB U.S. Dollar Index Bullish Fund
