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.
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.
- 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.