USD steadies after sharp CPI-driven losses. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes Greenback’s outlook.
More losses seem likely in the near-to-medium term
The sharp slide in the USD overall on Tuesday adds to the growing body of evidence from price action that the H2 USD rally is reversing. A good chunk of that gain has already been taken back but more losses seem likely to me in the near-to-medium term.
Fundamentals are less favourable for the USD and short, medium and longer-term price signals are leaning USD-bearish now.
A weak close for the DXY through November will seal a long-term (monthly) reversal signal on the charts.
Markets have been in ‘buy USD dip’ mode since mid-year; that will transition to ‘sell USD rallies’ from here.