Dollar Triggers a Technical Breakdown, Will Bears Show Up?

Talking Points:

  • EURUSD and DXY take out critical technical levels to further reversal patterns
  • Momentum does not automatically follow breaks; so keep tabs on stragglers like AUDUSD, USDCAD
  • Retail FX traders are net long Dollar vs the Euro but short vs Pound. See speculative positioning here.

Technical Forecast for US Dollar: Bearish

The bearish break Dollar traders have been keeping close tabs on for weeks was finally triggered this past week. Yet, just as with any journey, the destination isn’t reached with the first step. Unless we are trading derivatives, the break is only the start of an opportunity. Profit comes with the follow through that ensues. Is this a ‘loaded’ break that will find traction with motivated bearish interests or is it merely pressure relief for the speculative class that never musters the conviction of the wider market to establish meaningful trend. Technicals are not made for establishing motivation, but it can certainly lay out the levels that we can follow to tell us whether progress is being made or alternative intentions are being pursued.

For those monitoring the Dollar in general, one of

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