EUR/USD, USD/JPY Lead Potential USDOLLAR Topping Process
- EURUSD holds post-ECB swing high, for now.
- USDJPY yet to close below daily 13-EMA.
- See the 'high' importance events on the DailyFX Economic Calendar.
Coming into this week, market was net-long $47.5 billion notional US Dollar versus G10 FX, and the weightings of the allocations reveal where the risks are in this stretched market. In particular, two pairs - EURUSD at $24.6 billion and USDJPY at $11.6 billion - comprise the bulk of the US Dollar trade at the moment.
What we've been seeing the past 24-hours hasn't been the rush of new traders taking long EUR/short USD or long JPY/short USD positions, but rather those already long USD taking profits/short JPY or short EUR covering positions.
Positioning may be a significant factor in determining the US Dollar's direction in December, despite modestly bullish seasonality in the QE era of monetary policy.
Read more: USDOLLAR Index at Risk of Near-Term Top
--- Written by Christopher Vecchio, Currency Strategist
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