January 14, 2022

Is A Dollar Transition Underway?

The U.S. dollar has failed to benefit from the Fed’s increased hawkish rhetoric and has been losing ground. To some degree, the pullback in the greenback should not be too surprising from a technical perspective. Our intermediate-term oscillator showed overbought conditions. Additionally, speculators had built sizeable long positions in the dollar. These are bearish signals from a contrarian perspective. But is there more at play than just technicals? Are the macro conditions falling into place for the dollar to transition from strength to weakness?

The U.S. dollar has failed to benefit from the Fed’s increased hawkish rhetoric and has been losing ground. To some degree, the pullback in the greenback should not be too surprising from a technical perspective. Our intermediate-term oscillator showed overbought conditions. Additionally, speculators had built sizeable long positions in the dollar. These are bearish signals from a contrarian perspective. But is there more at play than just technicals? Are the macro conditions falling into place for the dollar to transition from strength to weakness?