In the bigger picture, it's all about whether or not Trump will follow through on his tariff threats come 1 August. That's the main thing to watch. He's kicked the can down the road long enough for it to stall any major impact on US inflation, seemingly creating a belief that tariffs aren't going to materially impact prices.
Circling back to the dollar, it has managed to find better footing as the short squeeze starts to build in the last two weeks. The thing is, it could've really been much better for the dollar and the squeeze be more violent had it not been for those meddling kids. Oh, wait. Got that wrong. I mean had it not been for Trump pressuring the Fed and then Waller and Bowman both turning a more dovish cheek.
So had it not been for Trump and the more dovish takes by Waller and Bowman, we probably would've seen the dollar jump much more with talk about a September rate cut arguably also off the table.
In gauging the short squeeze, the technicals are your best friend. The dollar has been beaten down so badly since April that any pullback now is just that, and not really a major reversal in the outlook. We've come to fully expect tariffs and TACO that much of that appears to be priced in, as argued here last week.
The stock market seems positioned for that as Wall Street continues to run to fresh record highs. Is FX - and the bond market as well - needing to play catch up?
This article was written by Justin Low at www.forexlive.com.Hence then, the article about is there more legs to the dollar short squeeze was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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