EURUSD is back below 1.03, USD Index (DXY) above 107 – The US Dollar is recovering. The extension of the recovery hinges on how large the share of trend followers was in the USD trend, economists at Commerzbank report.

EURUSD’s trend ended around 1.04

“All those who had only jumped on the bandwagon of the major slide in USD over the past two weeks because they were following the trend usually give up their USD positions as soon as the trend ends (which it did at EURUSD levels around 1.04 last week).”

“How far this recovery of the US currency has to run will depend on how large the share of these trend followers was in the USD trend.” 

“Please, dear readers, so not expect that as an analyst looking at fundamental reasons, I would be able to give even a half-way reliable estimate of this share. To be able to do that I would need data that is not available: data on who had previously entered USD sales and for what reasons.”