It seems to be momentarily pausing at this consolidation area of .3790 to .3845, swings in this range have been lucrative. I think the consolidation has to the do with the fact that the USDX is within a hair of breaking 80. We could see a dollar bounce, like we saw from early May to early June, but it's inevitable that 80 will be broken. Unless fundamentals significantly change, shorting the dollar will continue to be the path of least resistance. It wasn't too long ago when AUD broke 8000 and NZD broke 7500, everyone clamoring how overbought they were - analysts, gov'ts, traders, etc. Now look where they are. USD/JPY has been breaking down too lately and is the last straw in camel's back for USDX remaning above 80. The only thing the eur/usd has going for it short are the technicals. Daily and weekly RSI, MACD, BB, etc are showing "overbought". I don't trade solely based upon TA, but a lot of retail does, and many have taken the wrong side of this dollar selloff for quite some time (judging by Oanda's FXLabs).Their customers were >75% long USD/CAD since about 1.15 (ouch).
It is because everyone was clammering on about how overbought they were that they continued to defy gravity. Likewise, if this poll is an indication of public sentiment in the direction of the EUR in the future, then we can be pretty sure the bottom is in.
That's a bit of a non sequitur. AUD and NZD didn't continue to defy gravity due to people clamoring about their overbought nature. Central bank repositioning, dollar dumping, carry trade extending, commodities prices, interest rate increases, etc (i.e. fundamentals) played a much larger role.
It would appear that the six of us who claimed the dollar bottomed were correct. At least for now. As I said, when everyone is calling for the death to the dollar, somehow it comes back.
True good call. The question now becomes, how much of this dollar buying activity is actual long-term rebuying/repatriation, and how much is simply flight-to-quality / carry-unwinding in other crosses? If this global rout is short lived (europe up today, US markets doing ok), how long until the carry pairs come back into favor, and what effect will that have on the USDX?