The focus this week switches back to trade headlines and Trump's tariffs once again. For now, the dollar is finding some backing from the non-farm payrolls data last week. But can that really last in the bigger picture?
The dollar might be keeping in a firmer spot for now but the coast isn't clear yet. Dollar short positioning being rather crowded is definitely something that could work in the currency's favour on any squeeze higher. However, we've gone through months on end now with the dollar being pressured on multiple fronts amid the ongoing policy volatility and incoherence by the Trump administration.
As an aside, do also keep an eye out on the bond market as 10-year Treasury yields are now running up to near 4.35%. It is pushing up against the confluence of its 100 and 200-day moving averages. The US' fiscal situation is another key factor to consider in all of this and at the balance, it's also a net negative for the dollar currently.
But again, be very mindful of the short squeeze play. We might be overdue on that after having seen the dollar's poor form since April.
This article was written by Justin Low at www.forexlive.com. Read More Details
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