The US dollar leads the charge
This comes as the fears of contagion surrounding the collapse of the Turkish lira still lingers in the market. Equities are lower and the market is carrying on the dollar momentum seen from overnight trading.
The dollar index touched a fresh 13-months high earlier in trading and momentum continues to favour buyers still:
After shaking off resistance around the 95.00 to 95.50 levels, it's been a quick jump higher and resistance is now seen around the 97.00 level followed by the 23.6 retracement level @ 97.94.
The thing about the dollar's sharp move higher is that in markets, nothing ever moves in a straight line (unless you're the SNB and you pull the rug from under the EUR/CHF) so we may be bound for some retracement in the near-term. I'm considering thinning my exposure in my open positions in the meantime.
But as long as the overall trend remains intact, it's hard to argue against the dollar momentum especially when fundamentals continue to support the currency against the likes of the euro, pound, and aussie in particular.
Yes, there is still the issue of the twin deficits and that has been in place since last year. But as mentioned many times before, right now the market is putting that in the back pocket so it's wise to go with that. Markets may be irrational at times and may focus on things that you may not see eye-to-eye with, but if there's one key takeaway it is that markets are never wrong.
