There's little to stop dollar rising
Oct 23 (Reuters) -In 2022 the dollar's rally came to an abrupt halt due to the overcrowding of bets on its rise and investments in the U.S. currency. Following a lengthy correction and a purge of those bets and investments there is now little to stop a dollar rise that looks increasingly likely.
When the dollar peaked in 2022 it was also overbought, yet the resulting correction of these extreme conditions proved to be modest - just 23.6% of the prior rise.
This is important as a base for the dollar formed at the first possible Fibonacci retracement level - the least significant - which is a strong indication that the uptrend is alive and well with a correction laying foundations for a continuation of the uptrend that began in 2011.
The technical outlook supports a bigger rise, with the overbought situation alleviated and traders short dollars.
The currency's rapid advance this month has been fuelled by a squeeze of short positions that resulted in a swift rise and an almost 4% gain.
With little invested in the U.S. currency, October's rise could be the start of a much bigger move that could exceed 2022's high at 133.50 to reach 139.48.
That's roughly a 10% gain in value from September's close at 127.18.
For more click on FXBUZ
Targets for USD uptrend https://tmsnrt.rs/4eUGTl9
Trade-weighted USD https://tmsnrt.rs/3A2aGcG
(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
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