Video: The Dollar Posts a Sharp Reversal, Risk Trends Waver
• The Dollar reversed nearly all of the ground lost following its biggest drop in 18 months post-FOMC
• Risk trends meanwhile stalled quickly, but a committed deleverage has yet to take
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It is important to separate correction from trend. The Dollar looked to make that distinction over the past 36 hours. Corrections are by definition shorter-lived - though they are often volatile and feed upon persistant speculative appetite for reversals (picking tops and bottoms). The post-FOMC USD tumble surprised the medium-term position the currency has shaped and the increased tangibility of the 'mid-2015' rate hike time frame; but it fit for a market that had priced in more than a modest tightening cycle would justify. The speculative unwind happened faster than expected though with back-to-back 8-yard (billion) volume days for EURUSD. Was this correction sufficient to recharge the Dollar for its next thrust higher? Will Greece become a fundamental threat again for the Euro? Are risk trends close to stalling? We discuss these considerations in today's Trading Video.
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