Market Analysis: Weak Dollar’s Position

FXOpen

11 Jul 2023, 08:29

Bloomberg writes that the big hedge funds have flipped and are now taking a short position on the dollar in the expectation that the Fed is nearing the end of its cycle of raising interest rates.

It is possible that the weakness of the USD against a basket of other currencies is influenced by the announced intentions of the BRICS countries to issue a currency backed by gold.

Be that as it may, however, the EUR/USD rate has risen by an impressive 1.5% since the low of July 6, reaching a maximum since May 8. At the same time, the EUR/USD chart shows that:

→ the price has broken the downward channel upwards (shown in red);

→ the bulls are so bold that they are trying to break the double SHS pattern formation.

On the morning of July 11, a long upper shadow on the candle indicates the possibility of a false breakout of the top of June. However, markets are waiting for news about US inflation (Consumer Price Index data will be released tomorrow at 15:30 GMT+3). It is possible that they may further weaken the dollar, sending the euro even closer to the highs of the year.

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