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

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

Analysts are pointing to a bearish triangle pattern in (DXY) that points to a potential decline to around 98.98 and possibly the mid-96s.

However, they expect a transient snapback rally similar to previous events in December 2023, July 2023 and February 2023.

This rally, if it materializes, is expected to be corrective in nature and may test former support levels that are now acting as resistance at the mid-102 level.

“Unless the daily chart hits a technical bottom,” BofA notes, “our bias is to sell the election-year October seasonal rebound in DXY in exchange for YE24 down.”

The note highlighted that technical indicators and oscillators support a bearish stance on the dollar, suggesting that any October gains should be viewed as a selling opportunity rather than a signal of long-term strength.

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

Additionally, BofA’s broader analysis takes a cautious stance on gold, advising against chasing it due to tightness and momentum, while suggesting a potential upside in silver prices.

The outlook for the euro remains positive, while the pound is expected to correct despite the bullish trend. The position of this and other currency pairs is also moving in line with BofA’s bearish outlook for the dollar.