FxWirePro call Review: Correction in USD looks increasingly likely

Though we at FxWirePro remains positive on the dollar over the medium term, a correction looks increasingly likely in the USD over the coming weeks or so. After reaching 97 area in mid-August, the dollar index, which is the value of the dollar against a basket of six currencies weakened to 94.5 area by the end of the month.

Since then, it has started rising again. However, our calculations are strongly pointing to the possibility of weakness in the USD in the short-term, which could push the index to as low as 93 area, before buying recovers. However, as it is clear that the dollar bulls are strong, the index could move into a consolidation phase in reaching the target.

While many of the fundamentals such as the dollar squeeze by the U.S. Treasury, Federal Reserve, and president Trump’s attack on U.S. trade deficit are positive for the USD in the medium term, President Trump’s persistent attack on the U.S. Federal Reserve’s interest rate hikes and the strength of the USD are acting as bearish catalysts along with European Union’s plan to ditch the USD to keep the Iran agreement alive.