Investing.com – Bank of America said in a note on Friday that investors should consider selling the US dollar during a potential rebound next October, driven by historical seasonal patterns and current technical indicators.
According to Bank of America, while there may be an initial rise in the price of the dollar, the broader trend indicates a bearish outlook for the currency.
Analysts point to a descending triangle pattern in (DXY), which indicates possible declines to around 98.98 and perhaps into the mid-90s.
However, they expect a temporary spike, similar to previous events in December 2023, July 2023, and February 2023.
This rise, if achieved, is expected to be corrective and may test previous support levels that are now acting as resistance in the middle of the 102 areas.
“Unless the daily chart forms a technical bottom, our tendency is to sell the October seasonal rebound in the DXY to the downside YE24,” notes Bank of America.
The note emphasizes that technical indicators and oscillators support the dollar’s bearish stance, suggesting that any gains in October should be viewed as a selling opportunity rather than a signal of long-term strength.
This recommendation is based on Bank of America’s broader view of the foreign exchange market, including its technical forecasts for various currencies.
Additionally, Bank of America’s broader analysis includes a cautious stance on gold, advising against chasing it due to position expansion and momentum, while pointing to a potential rally in silver.
For the Euro, the outlook remains positive, while the British pound is expected to face corrections despite the upward trend. Forex and other currency pairs are also positioned for moves in line with Bank of America’s bearish outlook for the dollar.