FX FUNDAMENTAL ANALYSIS by Stewart Richardson
A Tired Dollar May Give Risk Assets a Breather
Back on 22nd April, we said that we thought the US Dollar was on the cusp of an important move, and that it was time to sit up and pay attention. Since that time, the Dollar has risen by the best part of 5% in just over two months, not a bad move in FX markets. We now think that this
22 FX TRADER MAGAZINE July - September 2018
move is getting a little tired and we would not be surprised if the Dollar experienced a period of soſtness ahead. Given the weakness in emerging market assets as the recent Dollar rally progressed, we think that risk assets generally will enjoy a period of Dollar weakness. What we are not entirely
certain about is how big a correction the Dollar may endure here (if any at all) and therefore how big a bounce to expect in risk assets.
Chart 1 below plots the US Dollar index on a daily basis. What we see here is that from late April and
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