Investing.com – Bank of America analysts said they have no problem tactically putting a brake on the U.S. dollar’s recent rally this week, citing multiple reversal signals and market momentum.

The FX Quant Insight bank report highlights factors such as lower US Treasury yields, reduced demand for US dollars and a shortened trading week in the US

“We are free to tactically decelerate the USD rally this week on trend reversal signals, lower US yields and the US holiday,” BofA wrote.

The dollar’s strength since the beginning of the month is said to be mainly due to trading sessions in the US and Asia.

However, bank analysts expect weaker activity this week during trading hours in the US due to Thanksgiving, which may weaken the dynamics of the dollar’s growth.

A key signal in the report is BofA’s bullish view on the currency, identifying it as the best currency pair to reduce USD strength.

“Our quantitative framework is for NZD/USD to be bullish this week on NZD call option flow and a spot trend reversal signal,” the analysts noted.

An improved NZD valuation is said to be increasing the currency’s attractiveness, although BofA notes that risks remain, such as a more dovish-than-expected meeting from the Reserve Bank of New Zealand (RBNZ).

Additionally, the bank’s technical models show signals of a reversal in the USD uptrend against the New Zealand dollar, British pound and Swedish krona.

On GBP bulls, the bank said it would position towards a lower structure as “demand for EUR call options remains subdued and trend analysis shows several signals of continued downtrend for EUR pairs.”

The 7-basis-point decline in 10-year US Treasury yields, driven by the nomination of Treasury Secretary Bessent, further confirms the bearish view of the USD.

“Bessent advocates for a more gradual implementation and transactional nature of tariff policy, reducing the bullish risk premium in USD,” BofA wrote.