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Watching Short-Term Support


(U1) Corrective Bounce


E-MINI S&P (U1): Rebounds From The 50-Day EMA

DOLLAR: ### POV: Dollar's recent sell-off remains sharp on a historical basis
and the risk of a short-squeeze is rising.
* After funding requirements prompted volatility in EURUSD crosscurrency basis
swaps ahead of Christmas, the USD rallied on perceived funding demand from
institutions across Europe.
* This was quickly reversed post-Christmas with markets citing month-, quarter-
and year-end rebalancing as a catalyst for the sharp dollar sell-off.
* Crosscurrency basis swaps have now returned to 'normal' levels and usual
service should resume.
* MNI's FX Positioning Indicator suggests the market has become less bearish on
the greenback: the CFTC COT report shows speculators held a net long position
for the first time since July 2017 last week. This closing of successful short
positions could underpin the greenback in the coming weeks.
* Of the seven weeks since the beginning of 2016 the DXY fell this sharply, on
five occasions the dollar rallied in the following week and only twice did it
fall further.