There was no catalyst for the sudden weakness in the US Dollar but this move could offer a great opportunity for dollar bulls. The short dollar trade is still a bit overcrowded and there are good reasons to see Treasury yields moving higher in the next weeks.
I’m starting to doubt that we even get more than one rate cut this year but for the market to price that in we will likely need stronger
economic data or more hawkish Fed comments.
Fed’s Waller is set to speak in a bit. Let’s see if he’s going to deliver some hawkish comments and give the greenback another boost.
EURUSD 4 hour
On the 4 hour chart, we can see that the pair is approaching a key resistance zone around the 1.1275 level where we can find the confluence of the old support and the downward trendline. If the price gets there, we can expect the sellers to step in with a defined risk above the trendline to position for a drop into the 1.10 handle. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and start targeting the 1.15 handle next.
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