This dollar correction seems to confuse many traders. What I’m seeing is not a sign to go long EUR/USD but rather a opportunity to short it at a higher price. The dollar has been on an marathon to break new highs and needed a break. Fundamentally nothing has changed; the Fed’s stance and outlook is still very hawkish and points to a December rate hike. The dollar correction was most likely a correction in the charts on a technical scale. Although I’m surprised how strong the pullback was, especially with AUD/USD, I’m still convinced it’s only a minor pullback and not the dollar crashing.
I’m still holding onto my long dollar positions. I added a couple shorts when the EUR/USD and GBP/USD began to hit resistance. Once the FOMC statement shock eases into the market, I think the dollar will continue back on it’s rally. The next big data to look for is the November pay roll and if that’s a good one, expect the dollar to break highs!
Here’s the dollar pulling back, but looks like it hit a support.