Talking Points:
• There are three major fundamental themes that the US is following: debt crisis, taper and risk trends
• The government shutdown this week seems to have defused debt disruption fears and an October Taper
• Without a swell in global risk aversion, deflating of the other two themes can force a dollar breakdown
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The USDollar is on the verge of a significant technical breakdown as the two key catalyst have seen their fundamental leverage diminish. Both fear of the debt crisis and Taper have faded these past few weeks, and with it the greenback's strength. As the anti-Taper and safe haven premium behind the currency collapses, the dollar is at clear risk of pitching into a serious bear trend. For bulls, the hold out hope is for a material risk aversion wave developing in the global capital markets and restoring the currency's buoyancy. In today's Forex Strategy Video, we discuss what fundamental themes the dollar is following along with trade opportunities for the prevailing bearish (USDJPY) and alternative bullish (EURUSD) scenarios.
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