USD: Can The USD Sell-Off Resume? A Look At Technicals, Positioning & Month-End Flows – Citi

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The US dollar has lost ground recently against the major currencies. What is the outlook for a further sell-off?

Here is their view, courtesy of eFXdata:

Citi discusses the scope for an extended USD sell-off in light of technicals, positioning, and month-end flows.

Technicals: DXY broke a key support on Monday and continues below support, explaining bullish breaks for EUR, JPY, GBP and select EM currencies.

Positioning: CitiFX Flows & Positioning shared that USD positioning moved into short territory this week, driven by selling by both real money and leveraged investors. We note that much of this net USD selling was likely against EM in aggregate,” Citi notes.

Month-end could bring more: The FX signal from the rebalancing flows suggests USD selling against EUR at month end per Month-End Asset Rebalancing: July 2020 Estimate. The model also suggest a mild rotation from equities to bonds with a very weak signal,” Citi adds.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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