The US dollar has seen some interesting reversal over the last few trading days. One key reason behind this drop in the Dollar Index was higher EUR because of higher inflation in Germany, but the real mover was also the “news” about Trump considering a new tariff strategy. However, yesterday, this was labeled as fake news, which raises the question of whether it might still be premature to call an end to the dollar’s bull run. While we’ve seen a solid sell-off, as long as the DXY remains above the 107 level, I’m carefull with USD bearish view. Tomorrow, we’ll also get the FOMC meeting minutes from December, when Powell delivered the hawkish cut. There’s a good chance the details might offer some more hawkish remarks, potentially triggering a dollar rebound, ahead of closed markets on Thursday and NFP on Friday.

However, I firmly believe that sooner or later the dollar will form a major top, maybe now in January when Trump is back in office in 2 weeks. I have been talking about that for a while, but to confirm that, I want to see the price breaking and holding below 107 on the DXY. In such case I want to see euro at 1.05, and then may look for longs on retracements.

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Grega

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