Bank of America Global Research discusses the USD technical outlook and maintains a buy-on-dip bias.
"We still prefer to buy USD dips into the fall months. Market reaction to US inflation data supported our buy the dip view. A bullish reversal day is forming for the BBDXY and a daily close above 1299 will confirm it. Above 1306 will bullishly engulf the prior two trading days. We think this favors our core/secular view of a stronger USD and weaker EUR, GBP, JPY, KRW and CNH as the calendar moves into the fourth quarter," BofA notes.
"We continue to see a downward sloping trend in the euro chart and prefer to sell rallies. The rally to the top of the channel ahead of CPI was a textbook technical opportunity to put on a short at about 1.0150 - 1.02 (the area between the 50d SMA and top of channel). We think risk remains skewed to the downside until the channel is broken or a bottom forms," BofA adds.