by Nick Simpson
- Our previous update had the US dollar index trading around the 61.8% Fibonacci retrace of the last major swing higher at 82.60.
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We noted that,
“this area had acted as support for three consecutive trading sessions and any failure to hold above 82.60 on the closing basis threatened a move back towards the prior support, around USDX 81.40.”
- Price did indeed move as low as 81.08 over the following trading sessions and hit our target area. Support was ultimately seen at the confluence of 61.8% Fibonacci and 200 day SMA.
Follow up:
- We still note that 81.40 is a major price pivot zone on the weekly charts and the price action has ultimately seen the dollar index close above this area. There is potential for a corrective move higher after the strong downside move last week
- The latest commitment of traders report revealed that large specs had cut the long USD wager by around 13% on the week to hit a net $38.5 billion position as of Tuesday. Speculators had likewise cut the short EUR FX (CME) bet by 38% on the weekly basis, to hit an $8.5 billion position on Tuesday. This broke the trend of four consecutive weeks, seeing increased bearish positions, and has the common currency around 51k net short contracts.
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