The bullish signal of last week on our Cot Fx on the Dollar Index has been reflected on the market with a rise above 80 of the greenback. This signal is also confirmed by the graph that shows us the exposure of hedge funds on the futures market.
It’s quite evident that the situation is not addressed towards sudden downward accelerations of the greenback, making the formation of a bottom in area of 79-80 more likely. From this point of view, betting against the dollar might be a bit risky.
We can find confirmations pro dollar also in the rates differential with the 2 years Eur-Usd swap negative by 8 basis points and in a net divergence with the trend of Eu-Us from the point of view of the currency. The question is: who is lying between the two? Once again the ECB meeting of next Thursday will be decisive as we will see if Draghi will mention the words of Weidmann on March 25th about the possibility of a QE in Europe, when EurUsd began to fall (graph source: Bloomberg).
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