Renewed favor for safe haven assets in May has pushed the U.S. dollar to trade at its highest level of the year. Its steep run-up has set it up for a pullback, says one market watcher.

“The dollar has become very overbought,” Matt Maley, equity strategist at Miller Tabak, told CNBC’s “Trading Nation” on Wednesday. “When it was really sky-high, it got up to its 200-week moving average. I think that’s going to provide a little bit of resistance for the dollar.”

The DXY U.S. Dollar Index bumped up against its 200-week moving average earlier this week for the first time since late 2017. The index crossed its shorter-term 200-day moving average in early May.

“Also you look at the RSI chart, the weekly RSI chart, it’s reached overbought levels that have been associated with other highs recently as well,” said Maley.

Its relative strength index trades just above 66, shy of the 70 level that typically suggests overbought conditions. The U.S. Dollar Index traded above 77 in November 2016 which preceded a top in January 2017.

“These kind of short-term indicators tell me that we’re going to see a pullback on the dollar over the near term, or the next few weeks, and that should allow some short-term traders to take advantage,” said Maley.

Boris Schlossberg, managing director of FX strategy at BK Asset Management, sees any temporary pullback in the dollar as an opportunity to buy.

“The dollar is simply just the best currency in a world full of trouble especially against the euro and against the pound where you have a double combination of a very toxic political situation and a slowdown in the economy,” Schlossberg said on Wednesday’s “Trading Nation.”

Global central bank action should create favorable conditions for the dollar, according to Schlossberg.

“The only two central banks in the world that are raising rates is going to be the Fed and probably the Bank of Canada – it’s only North America – and the yield differential is going to get larger and larger and that’s just going to provide a strong bid for the dollar,” he said. “To me, any dip in the dollar right now is a buy for the time being.”

The DXY index is on track to close May with a 2.5 percent increase, its best monthly gain since November 2016. The dollar is up 2.2 percent for the year.

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