Dollar's Resurgence Spurred by Interest Rates and Carry Traders
The US dollar is experiencing a resurgence against several major currencies, particularly in the USD/JPY and USD/CHF pairs.
The interest rate differential continues to favor the US dollar over the longer term, according to Chris, a proprietary trader with more than 20 years of experience. He notes that carry traders are taking advantage of the swap at the end of each session, contributing to the dollar's gain.
In USD/JPY, the dollar is pushing towards the 160.000 level, holding above both moving averages and a rising trendline from August 20 lows. A support level at 159 and 158.75 remains in place if there's a pullback.
For GBP/USD, the British pound has retreated from its highs near 1.3700 and is testing the 50-period EMA. If it breaks below the 1.36 level, Chris suggests considering going short for a small trade.