quoteespite several attempts higher the dollar finally had to give in
on Friday. Momentum had clearly been vanishing on the
stronger dollar. So now here we are at the beginning of the new
week. Actually, the present level in the dollar index is very
important, indeed. A definite break below 90.26 (119.70 in the
EUR/USD) will mean that the stronger for longer USD is going
to correct before heading higher again. Market participants
have simply been piling in the same boat with the strong USD,
whereby it got too heavy and lost steam. All good and well -
the dollar will prosper again, and a coming correction will do
nothing but add new and more fuel to the next dollar take-off
higher. Friday evening I myself did turn the spot as well and
are now in possession of net sold dollar positions all over the
place. In EUR/USD I established a new net bought position
with first target at 121 and stop loss below 118. In USD/JPY the
first target for my new 50% sold position is coming in at 116.75
and stop loss is running above 119.50. AUD and NZD as well
are about to gain a footing against the dollar in the short run.
Considering the loads of domestic problems haunting both
commodity currencies I will be happy to see a return to 75 and
68 for the newly established 100% bought positions. So all in all
we are once again in a corrective phase on the dollar in general.
Normally, not a very rewarding phase and certainly a very
dangerous phase. We need to see a snap follow-through on the
latest break lower on the dollar. Otherwise market participants
will soon loose their nerves and return to the dollar-for longerscenario,
but for now the USD is retreating.