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MNI FX Speculative Positioning - Net USD Specs Continue To Fall Despite Dollar Bounce


Executive Summary:

  • Net specs on USD continued to fall despite the dollar bounce amid global risk-off environment; net contracts are down 12.5K to 142.3K in the week ended January 25 (down nearly 160K from their high of 294K reached in the end of November).
  • The rise in Covid uncertainty, political instability in some EM markets and the hawkish Fed had supported the US Dollar in H2 2021; DXY index reached a high at 97 in the end of November before consolidating slightly lower in recent weeks.
  • However, investors’ concern over growth expectations has been rising in the past two weeks and the recent selloff in risky assets has been supporting the greenback.
  • DXY index has been rising up sharply against major crosses, reaching a local high at 97.44 on Friday before consolidating lower on Monday (towards 97 level).
  • Next resistance to watch on the topside stands at 97.7190, which corresponds to the 61.8% Fibo retracement of the 89.21 – 102.98 range.

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Source: Bloomberg/MNI

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