• The dollar - like most currencies - is struggling for drive with risk trends meandering and NFPs ahead
• Scenarios for sentiment trends and yield forecasts, however, largely support the greenback
• The missing component for a dollar rally is a rebound in market-wide activity and conviction
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The dollar has floundered these past weeks as more active counterparts move the majors back and forth. While the benchmark currency is adrift in the absence of market conviction and ahead of US NFPs; running through its fundamental scenarios, its potential has a decidedly bullish lean. If risk aversion kicks in, the greenback's safe haven appeal is revived. Should speculative appetites maintain course, the Fed's upgraded yield outlook will further gain traction. If fundamentals temper globally, the central bank's Taper dedication will draw a stark contrast to more sympathetic central banks like the ECB, BoJ and PBoC. The dollar's options look encouraging, we are just missing volatility. We discuss the dollar's medium-term view in today's Strategy Video.
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