NEW YORK - The U.S. dollar's recent rally has put it on track to form a golden cross - a bullish technical trading chart pattern - affirming an upbeat near-term view on the currency, according to a BofA Global Research note published on Wednesday.
A golden cross occurs when a short-term moving average crosses above a long-term moving average.
The dollar index's 200-day moving average of 103.036 is close to being topped by the 50-day moving average at 103.001, according to LSEG data. The index measures the currency against a basket of six rivals.
"This supports our 4Q23 technical view of a supported and potentially stronger USD," BofA Global Research technical strategist Paul Ciana said in a note published on Wednesday.
The note was published before the release of the much anticipated Federal Reserve interest rate decision on Wednesday. The dollar index was down 0.47% at 104.707 ahead of the decision at 2 p.m. ET (1800 GMT).
The dollar index rose for its ninth straight week last week, its longest winning streak in nearly a decade, as a resilient U.S. economy - combined with weaker growth abroad - has fueled a rebound.
The last time a golden cross was formed in the index, it went on to rise another 24% before peaking, according to a Reuters analysis.
Ciana, however, noted that the index's recent strong rally presented a risk to the bullish signal.
Such a move now would lift the dollar index to over 129, far above its 2022 high of 114.78.
"A signal when price is near the highs may make it difficult to perform vs a signal that occurs just after a timely dip," he said.
(Reporting by Saqib Iqbal Ahmed; Editing by Sharon Singleton)