After a strong run over the past several weeks, the dollar's technical indicators had been stretched, and some bearish divergences appeared, suggests the research team at BBH.
“The two-year interest rate differential between the US and Germany peaked on May 21, suggesting that some of the fuel of the dollar's rally was spent. We have also noted that in the futures market, speculators added to their gross longs for four of the past five weeks. The euro bulls made their stand ahead of $1.1500. Our reading of the technical condition suggested potential into the $1.1750-1.1800 area.”
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