Sell ​​October Election Year Seasonal Increase in US Dollars: BofA By Investing.com

Investing.com — Bank of America said in a note on Friday that investors should consider selling the U.S. dollar during a potential pullback in October, driven by historical seasonal patterns and current technical indicators.

According to BofA, while there may be an initial uptick in the dollar, the broader trend suggests a bearish outlook for the currency.

Analysts are pointing to a bearish triangle pattern in (DXY), indicating potential declines to around 98.98 and possibly the mid-96s.

However, they anticipate a temporary “snapback” rally, similar to the previous events in December 2023, July 2023 and February 2023.

This rise, if it materializes, is expected to be corrective and could test previous support levels, now acting as resistance in the mid-102s.

“Unless the daily chart forms a technical low,” BofA notes, “our claim is to sell a seasonal October election year rally in DXY for YE24.”

The note points out that technical and oscillator indicators support a bearish dollar stance, suggesting that any gains in October should be viewed as a selling opportunity rather than a signal of longer-term strength.

The recommendation is based on BofA’s broader view of the foreign exchange market, including its technical expectations for various currencies.

Additionally, BofA’s broader analysis includes a cautious stance on gold, advising against chasing it due to positioning and stretched momentum, while hinting at upside potential for silver.

For the euro, the outlook remains positive, while the pound sterling is expected to face corrections despite an upbeat trend. FX and other currency pairs are also positioned for moves that align with BofA’s bearish dollar outlook.