Dollar shorts could be stretched to breaking point
Oct 15 (Reuters) -Those that are short the U.S. dollar could be stretched to breaking point if the greenback overcomes key levels.
The USD index, which tracks the dollar against a basket of six major currencies, on Monday broke and closed above the 103.140 Fibo - a 50% retrace of the 106.13 to 100.15 (June to September) drop - a bullish development.
If the USD index closes on Tuesday above the daily cloud, which currently spans 101.628-103.280, it would add to the upside bias towards the 103.846 Fibo - a 61.8% retrace of the same 106.13-100.15 drop.
That would put the remaining speculative dollar shorts under severe pressure as buy stops associated with their positions would be vulnerable to being triggered.
The dollar was perched on Tuesday near its highest level against major currencies in more than two months, spurred by wagers that the Federal Reserve will proceed with onlymodest rate cuts in the near term.
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Daily Chart: https://tmsnrt.rs/3BTTwOG
(Martin Miller is a Reuters market analyst. The views expressed are his own)
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