Josh Weiner
Speculative interest in the U.S. dollar is surging, with traders doubling down on expectations of further greenback strength in the coming days and weeks. This bullish sentiment underscores a market brimming with confidence in the dollar’s upward trajectory.
Net speculative long positions, as measured by contracts held by International Monetary Market participants across key currencies such as the euro, yen, pound, Swiss franc, Canadian dollar, and Australian dollar, have reached their highest levels since July. For the week ending December 17, the net value of these positions surged to $26.11 billion, a significant increase from $22.88 billion the previous week.
Despite pulling back slightly from a two-year high on Friday, the dollar managed to notch its third consecutive week of gains. This resilience comes as new data points to a slowdown in inflation just days after the Federal Reserve signaled a measured approach to future rate cuts, pushing any substantial easing to 2025.
The USD Index, which measures the greenback against six major currencies, remains firmly bullish. Positive 14-week momentum continues to bolster the outlook, with the index poised to climb further. Market analysts are eyeing the next major target at 108.962, representing a 61.8% Fibonacci retracement of the 2022-2023 decline from 114.78 to 99.549.
As market dynamics evolve, the dollar’s upward trajectory is capturing the attention of traders and speculators alike, cementing its position as a dominant force in the global currency landscape. Expect heightened activity and potential volatility as the greenback pushes closer to key technical milestones.
