Commitment of Traders
Doing some detective work.
Technical outlook for the several of the most actively traded currencies.
The recent strength of the euro and sterling seemed to evaporate, while the yen and dollar-bloc currencies recovered. Is this a major trend change or was it simply reflecting some position adjustment in a thin market?
Dolllar weakess is largely concentrated against euro and sterling and those handful of currencies that move in their orbits. The US dollar is firm against the dollar-bloc and yen and many emerging market currencies.
Travesty- n: “a false, absurd, or distorted representation of something.”
Overview of the near-term outlook for the major currencies.
As suggested here last week, the dollar moved higher over the past five sessions. Although it finished the week on a firm note, I suspect we may have a pullback before seeing higher levels. Here is why.
Overview of the price action in the fx market.
It may seem counter-intuitive but the US dollar appreciated last week, despite the partial closure of the Federal government, the heightened risk of default and the nomination of Yellen. The dollar can move higher next week too.
Technically, the dollar is looking a bit better. Here is our assessment.
Overview of near-term dollar outlook.
Even if one correctly predicts what the FOMC does next week, getting the direction right for dollar is a different matter. The markets are anticipatory in nature and the effect often takes place before the cause.
The Fed is among the only major central banks not meeting next week, yet it is overshadowing the others. The dollar's tone improved markedly in recent days. There is still scope for the Fed to disappoint the dollar bulls.
Next weeks events placed within the larger context.
Short-term, dollar risks still appear on the downside, but this appears largely corrective in nature. Medium-term, a higher dollar still appears to be the most likely scenario.