The greenback came under heavy selling pressure and the US Dollar Index (DXY) corrected more deeply than analysts at ING thought. But any further losses as seen as corrective.
Quarter-end flows and position adjustments
“While the macro risks remain skewed for a stronger dollar, over the short term the dollar does look to be getting caught up with quarter-end re-balancing flows and the de-leveraging of tightly held positions – including long dollars. Our fear is that some disorderly moves in equity markets could prompt a little more of this position adjustment – even though the macro-driven dollar bull trend remains firmly in place.”
“Any further losses should be corrective (outside risk to 110?) and we would still favour 120 later in the year as the Fed tightens conditions still further.”