Dollar Price Action Setback: Will USD Continue to Fall?
The US Dollar's recent price action has been closely watched by traders and analysts. Following the announcement of increased Treasury buybacks, the USD set a fresh lower-low this week. Despite the breakout in EUR/USD stalling, GBP/USD and AUD/USD saw their breakouts accelerate.
One of the key drivers behind the USD's price action is the carry trade, particularly in the USD/JPY pair. While bulls continue to bid dips in USD/JPY, the Japanese Yen remains a crowded long position. This has led to multiple episodes of unwind since 2022, with each event triggered by softening US inflation.
On the charts, there are several levels of resistance for the USD, including the Fibonacci level around 99 handle and the prior swing at 99.18. Meanwhile, EUR/USD has put in clean continuation since the FOMC breakout from the falling wedge in late-July, with a fresh three-month high this week.