USD Overbought Conditions Signal Potential Correction Against Major Pairs

The US dollar appears overextended against major currencies, with technical indicators suggesting a correction may be imminent after its recent strong rally. EUR/USD, GBP/USD, and USD/CHF all show signs of extreme positioning, while EUR/GBP cross rates indicate potential rebalancing opportunities. The dollar's strength has been driven by expectations of higher-for-longer US interest rates and robust economic data, but momentum indicators now flash overbought signals across multiple timeframes. Key resistance levels are being tested on USD/CHF near parity, while EUR/USD approaches critical support near 1.0500. Technical oscillators including RSI readings above 70 on several dollar pairs suggest the rally may be losing steam. Traders should watch for any disappointment in upcoming US economic data as a potential catalyst for profit-taking. A technical correction could see EUR/USD bounce toward 1.0650-1.0700, while GBP/USD might recover toward 1.2650-1.2700 resistance zones.