Trading Video: US Dollar and Stocks Follow the Path of Least Resistance
• If we were to take the S&P 500's move at face value, it would seem there was strong risk appetite Monday
• Demand for 'riskier' assets was uneven Monday and even the S&P 500's run lacked depth
• The Dollar would also follow the lower boundary move while the Euro played aloof to growing risks
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The Dow Jones Industrial Average leveraged its biggest rally in two months to kick off the week. On the surface, this looks like a robust sign of 'risk appetite' that would seemingly refresh investor sentiment. Yet, the same confidence wasn't readily displayed in other corners of the speculative system that usually follow speculative appetite. What we are seeing is the same motivation that sent US equities stumbling last week and has spurred the USDollar from the floor of its rising channel - resistance. To turn US equities into a deeper retreat would risk sparking a concerted deleverage. For the Greenback to drop meaningfully would mark a deviation in the simple divergence in policy views. The markets are following the path of least resistance rather than triggering a systemic event. What does this mean for the world's most liquid equity market, the most traded currency (USD) and the Euro's lingering threats? We discuss the top themes in today's Trading Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.