Chief FX Strategist Shaun Osborne of Scotiabank notes that the US Dollar (USD) is trading near its holiday lows, exhibiting a softer tone despite firm US yields. While not representing significant weakness, Osborne suggests the USD may be overvalued and could experience a downturn based on historical post-election performance. He anticipates potential liquidation pressure from long USD positions if the softening trend continues.
US Dollar retains a softer undertone, leaving the DXY trading close to the lows seen around the holiday period, Scotiabank’s Chief FX Strategist Shaun Osborne notes. DXY support is 107.75 intraday“It’s not a case of significant dollar weakness, of course, but the currency has been on a strong run and remains quite significantly overvalued relative to its short run fair value estimate.
”“Essentially, traders and investors are long USDs, and positioning may be prone to some liquidation pressure if the USD continues to soften. There was a lot going on yesterday. Despite the president-elect’s denial that tariffs would only be applied selectively, the USD traded broadly lower over the session and only managed to strengthen a little from the intraday low following Trump’s comment.”“US yields remain firm. The US 10Y is nearing 4.70%, just shy of last April’s peak around 4.74%.
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