Reading through various articles and reports this morning, I’ve been struck by the fact that USD sentiment is definitely on the improve. This has been ongoing for about the last two weeks and we may soon see a medium term recovery for the greenback. This is certainly not a move I’d be chasing as the market will be very wary of a return to the bear-USD trend, so we will see lots of dips in the USD.
My preferred trades are either short EUR/USD or long USD/JPY. I would not consider selling EUR/USD at these levels close to technical support, but I’d rather wait for a rally back towards 1.45 for a medium term short. If the USD/JPY market suddenly turns bullish then it will move hard and fast and levels near 81 are still cheap in the greater scheme of things.
As I said yesterday, if USD sentiment improves then the GBP and CAD will also likely to make significant gains on the crosses.