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Talking Points:
- US Dollar Technical Strategy: Long via Mirror Trader USD Basket **
- Prices Suffer Worst 4-Day Decline in Over a Year
- Rout Leaves Multi-Year Uptrend, Bullish Bias Intact
The Dow Jones FXCM US Dollar Index continues to sink, falling for a fourth consecutive day and hitting the lowest level in two months. The momentum behind the selloff has proved to be dramatic, with prices suffering the fastest four-day rout in close to 15 months.
Aggressive losses notwithstanding, taking up a short position appears unattractive. In the longer-term sense, recent volatility is a long way from threatening the multi-year US Dollar uptrend in play since August 2011. In fact, recent volatility has been entirely locked within the bounds of the choppy range in play since prices topped in March of this year.
In fact, even a return to mid-May lows would amount to a pullback of less than 5 percent from year-to-date highs. By comparison, similarly potent downward corrections in the broader advance recorded thus far have averaged closer to 6 percent. This means the greenback is a way yet from setting off structural trend change alarm bells, suggesting current moves may represent a future long entry opportunity waiting to happen (at least thus far).
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** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.
