As the core CPI and real hourly earnings report exceeded expectations, the US Dollar (USD) experienced a significant bounce, catching many traders by surprise. Analysts at OCBC, Frances Cheung and Christopher Wong, highlight the potential for USD shorts to face another squeeze in the near future.

The recent upside surprise in US economic data serves as a stark reminder of the risks associated with crowded USD short positions. This also emphasizes how US data releases can have a disproportionate impact on the USD’s price movements. With upcoming reports on PPI and initial jobless claims, a continuation of positive data could lead to a reassessment of dovish expectations.

Given these factors, there is a strong possibility that USD shorts may face further pressure in the market. Currently, the DXY stands at 101.82, with daily momentum showing a bullish trend and the RSI on the rise. Key resistance levels are seen at 102.20 (23.6% Fibonacci retracement of 2023 high to 2024 low), while support is found at 100.50 levels.

USD chart
Source: Pixabay

Analysis and Implications for Investors

For investors and traders, the recent surge in the US Dollar highlights the importance of staying informed about economic data releases and market sentiment. The potential for USD shorts to face further pressure underscores the need for a well-rounded investment strategy that considers both fundamental and technical factors.

As the market dynamics continue to evolve, it is crucial to monitor key resistance and support levels to gauge potential price movements. Additionally, keeping an eye on upcoming economic reports can provide valuable insights into market trends and potential trading opportunities.

Overall, the recent developments in the US Dollar market serve as a reminder of the volatility and unpredictability of the financial markets. By staying informed and adapting to changing market conditions, investors can position themselves to capitalize on opportunities and navigate potential risks effectively.

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