Dollar Reaches New Yearly Highs as EUR/USD Hits Extreme Oversold Territory
The US dollar has reached fresh yearly highs as it continues its three-week bullish streak. This is despite the USD/JPY pair remaining stable, whereas in previous years this was a major driver of USD strength.
This week saw the dollar break through several resistance levels, including a key Fibonacci level that had previously held at 101.80 since June. The move also took place after a significant fall in EUR/USD to its most oversold state in over a decade.
The recent decline in EUR/USD has pushed the pair into extreme territory on the daily RSI chart, with readings not seen since March of 2015. This sets up for either a major macro stress event or mean reversion setups.
In contrast to previous weeks, USD/JPY saw relatively calm trading this week, despite its history as a driver of USD strength and the crowded carry trade still influencing market dynamics.