USD steadies after sharp CPI-driven losses. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes Greenback’s outlook.
The sharp slide in the USD overall on Tuesday adds to the growing body of evidence from price action that the H2 USD rally is reversing. A good chunk of that gain has already been taken back but more losses seem likely to me in the near-to-medium term.
Fundamentals are less favourable for the USD and short, medium and longer-term price signals are leaning USD-bearish now.
A weak close for the DXY through November will seal a long-term (monthly) reversal signal on the charts.
Markets have been in ‘buy USD dip’ mode since mid-year; that will transition to ‘sell USD rallies’ from here.