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Currency Market: US Dollar Index Pulling Back Into a Great Risk Reward Buy Zone


The euro should fall below 1.25, and the British pound still looks like a short as well.

MINYANVILLE ORIGINAL Not much has changed since my update last week, so I am going to keep it brief. The US Dollar Index is pulling back below the 82.5 support level I cited, and I think it is now time to get aggressive on the long side again. The euro should fall here just below 1.25, and I think any announcement about ECB bond buying will be met with a sell-the-news reaction. The British pound also looks like a good risk reward short at current levels. However, the only thing that concerns me is that commodity currencies remain strong against the US dollar, most notably the Australian dollar. The euro has the largest weighting in the US Dollar Index, so I think it will start to lead the way and roll back over. Time will tell, but this certainly looks like a spot where you can take some risk on short euro and British pound positions!

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Positions in EUO, EURUSD, GBPUSD, GBP futures.
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