The dollar, which rose after the Federal Reserve’s surprise hawkish tilt last week, saw a huge recovery last week caused by an exodus of speculative shorts that has potentially shifted the overall bias back to the upside.

The USD index, which tracks the dollar versus a basket of six currencies, registered the biggest weekly rise since April 2020. It managed to break and finish last week above the 91.947 Fibo, a 61.8% retrace of its 93.439 to 89.533 (March to May) drop. That increases scope for further gains through the 92.517 Fibo, a 76.4% retrace of the same 93.439 to 89.533 fall.

Commodity Futures Trading Commission data show that for the week ending June 15, the value of the net short USD position rose to $18.99 billion — from $17.66 billion the previous week. Some of the buy stops associated with those shorts may already have been taken out, as the dollar’s Fed-induced rise has put pressure on traders to close short positions.
Source: Reuters (By Martin Miller)