US Dollar Outlook: Near-Term Rebound Ahead as Futures Traders Remain Long
The US dollar has fallen sharply but technical analysis suggests it may be due for a near-term rebound. With key inflation data and an ECB meeting on the horizon, market participants are bracing for potential catalysts that could drive the USD higher. Crude oil prices have been rising since early August, which may not yet be reflected in upcoming PPI and CPI figures.
Despite this, futures traders remain heavily long the US dollar, according to Commitment of Traders (COT) data, with futures traders on CME still holding $25.4 billion worth of USD exposure. Asset managers and large speculators are also net-long DXY futures by around 33k contracts.
A near-term bullish case for the US dollar index can be constructed from a technical perspective, with doji formations and high-volume nodes supporting potential reversals in key currency pairs like EUR/USD and USD/CAD. However, a longer-term bearish bias remains intact due to lower highs formed in 2022, early 2025, and June this year.