The latest drop in the US Dollar Index (DXY) has pushed the currency benchmark into oversold territory for the first time since early June, but that doesn’t mean a rapid reversal is on the horizon. Over the last 25 years, the DXY continued to decline 64% of the time in the 14 days following an oversold reading on its 14-day RSI. Extending the time horizon doesn’t help much either; the DXY was positive just 39% and 41% of the time in the subsequent 30 and 60 days, respectively, over the same period.

 

Source: Bloomberg, ICE

 

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