Remaining speculative U.S. dollar shorts will come under more pressure if there is sustained trading above a recently broken technical level.
The speculative dollar short position – derived from net contracts of International Monetary Market speculators in the euro, yen, pound, Swiss franc, Canadian and Australian dollars – has fallen.
For the week ending Oct. 8, the value of net short positions held by speculators fell to $8.52 billion from $12.82 billion a week earlier. However, bids and buy stops associated with the remaining speculative shorts could lead to a bigger dollar recovery.
The USD index, which tracks the dollar against a basket of six major currencies, is closing on last week’s 103.170 peak which was its highest since mid-August.
If trading manages to regain and persist above the already breached 103.140 Fibonacci level – a 50% retrace of the 106.13 to 100.15 (June to September) drop – that would be a very bullish signal and put shorts under pressure.
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