The US dollar rose to 106.80 in the DXY index this month delivering handsome profits to currency investors. The USD is the top-performing asset in the forex market this year along with gold and copper in the commodity markets. Investors who took an entry position in these three assets early this year made tenfold returns in just four months. The commodity markets outperformed the global equity market in 2024 due to global conflicts in the Middle East and Russia-Ukraine.
Also Read: Gold vs US Dollar: What Can Deliver Most Profits in 2024?
Sell-off Incoming For the US Dollar? Investors Look To Book Profits in the USD
The latest data indicates that the US dollar futures have been considerably reduced by currency investors this week. The reduction in net short positions in the USD leads to speculations that a profit booking and sell-offs are on the cards. Currency investors are now at their most bearish level since June 2021, according to the Commitment of Traders (COT) released by the Commodity Futures Trading Commission (CFTC).
Also Read: What De-Dollarization? US Dollar Bulldozes BRICS Currencies
Large hedge funds and institutional investors might soon indulge in profit bookings in the US dollar as the currency peaked. Therefore, the chances of the USD retracing in price remain high during the last week of April and the first week of May. If profit booking is initiated, the USD could fall to the 104 level in the next two weeks.
However, currency investors have been steadily accumulating the US dollar at every dip in 2024. The price fall would open another round of accumulating cementing the prospects of the USD. Therefore, since the buying pressure is higher, the world’s leading currency could catapult to 106 again a few weeks later.
Also Read: US Dollar Fails to Surpass Nigerian Naira Despite Outpacing Yuan & Yen
The US dollar has been dominating the currency market this year outperforming all local currencies by a mile. The Chinese Yuan, Indian Rupee, and the Japanese Yen fell to new lows against the USD. The dip is a cause of concern to developing countries as it severely affects their import and export sectors.
