Building negative risks for the USD – Scotiabank
The USD remains firm but gains versus the core majors are relatively minor. Shaun Osborne, Chief FX Strategist at Scotiabank, analyzes Greenback’s outlook.
USD is correlating less strongly with yields and spreads than it did in August and September
While the USD is firm overall it closed lower on the week through Friday in DXY terms and late week price action in the index was technically soft despite the weak risk environment. Price action today echoes that trend to an extent and the USD generally is correlating less strongly with yields and spreads than it did in August and September.
The USD remains heavily overbought on the longer-term (weekly) chart and price action in the early part of the month suggests the DXY has peaked. These two technical factors suggest building negative risks for the USD from my own point of view.
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