When will the US dollar continue its rally? Let's observe the USD index in pursuit of answers.
DXY holds slightly below its 4-year high on Wednesday, pressured by US airstrikes in Syria and by dovish comments of the NY Fed President Dudley. This week he said a stronger currency could hurt the US economic growth.
He doesn't fool us!)
The strong bullish trend in USD will clearly remain in place. Dollar index hit 84.86 on Monday; this was the highest level since July 2010. Before that DXY has risen for 10 weeks in a row on speculation that the US Fed will raise interest rates sooner than the central banks in Europe and Japan.
USD is clearly overbought these days. According to the recent CFTC data, net long positions contracted a little, but still remain overstretched. A lot of hedge funds are now taking profits after the recent USD rally, so the current pause could last some time. On the other hand, many investors will be looking for good opportunities to buy the greenback on dips, so we expect the USD index to find bids around 84.00.Publication source