USD Graphic Rewind 07.09
USD INDEX GRAPHIC REWIND
It was a choppy day for the dollar index Thursday, as positive props continued to put the dollar under pressure, but some speculators have re-entered the market using dips as an opportunity to buy the dollar, anticipating an eventual rise after another session of being beaten down. Risk appetite was certainly on over-night with Asian and European equities rallying strongly following strong close by US equities on Wednesday. As N. American traders returned Thursday they were brimming with confidence after such firm gains, risk appetite was supported early as weekly jobless claims dropped. The dollar was ultimately under pressure with such risk appetite, as investors shunned the dollar and picked up beaten down equities and risker FX. As mentioned Usd speculators have re-entered the market as the index sets up for its third week of losses, investors feel the index is due to correct higher and the dollar to come back in favour. We can see this in the above chart, how well supported the dollar was on dips lower, almost immediately re-tracing all of its moves lower.
Looking ahead, Asian markets have notched up another round of gains and set up a positive close to the week, the dollar is likely to remain under pressure especially if the euro can push above its late NY highs at 1.2713. The speculators are not wrong though, it is our position also that the dollar is due to regain some lost ground and start to strengthen.
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