### POV: Dollar's recent sell-off remains....>

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.