Charts: This Dollar Rally has Legs

The recent rally in the dollar index is set to continue as worried investors seek the relative safety of the greenback, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC Monday.

Charts: This Dollar Rally has Legs
Charts: This Dollar Rally has Legs   

"We're still living in a world where the dollar is the main currency, so when people are worried and risk averse, they panic back into the dollar," Griffiths said.

"We're now having a rally and that rally has definitely got legs on it. The minimum rally is to retrace a half of what it lost last year. That gives you a target of 82 (points), well we're nearly there, but it's quite likely to go to about 90 (points)," he said.

The dollar index was around 80.24 points early Monday.

As the dollar slumped, hedge funds were encouraged to use the currency to invest in global markets, but that "carry trade" is set to unravel, Griffiths said.

Meanwhile, the currencies that were favored by investors instead of dollar are now going to revert to "nearer the right levels," he said.

"Particularly on the euro, the chart is saying $1.25 and for sterling against the dollar, much more likely to go towards $1.45 than the current level," Griffiths said.

- Watch the video above to see Griffiths' view on the FTSE-100 and Shanghai Composite Index.

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