For several weeks now, we've been alerting you to the risk of a fall in the US dollar, the consequences of which extend far beyond the G10 currencies. The chart below is a perfect illustration, based on a basket of Asian currencies including the Chinese renminbi, the Hong Kong dollar, the Indian and Indonesian rupees and the Korean won, to name but a few.

Asian Currencies

Source: Bloomberg

The index has succeeded in breaking out of its downtrend, illustrated by a downtrend channel that has been in progress since the start of the year, breaking through the 91.45 level. Momentum indicators such as the MACD simultaneously triggered a bullish divergence that had been in place since last summer, and the 89-day moving average was also breached. The structure therefore argues for a continued recovery towards 93.55, as long as the 91.45/30 support holds its ground.

Elsewhere in the currency galaxy, the ZAR is benefiting from the status quo of the central bank, which has kept rates unchanged and maintained its hawkish stance to continue fighting inflation. The kiwi and the aussie are challenging their respective resistances at 0.6060 and 0.6550, whose outright breach would open up the respective resistances at 0.6190 and 0.6700. The USDSEK has rallied to 10.40 and the USDNOK to the 10.6787/10.5747 zone, where an intermediate rebound cannot be ruled out before the downtrend continues.