Repeats With No Changes
Nov 19 (Reuters) - Over the Last Two Years, the Dollar Has Been Largely Rangebound, Something That Has Not Changed Even Since the so-Called Trump Trade Catapulted the Currency Higher Against Its Major Counterparts Following the U.S. Election.
However, the Greenback Did Stop Short of Taking Out the Two-Year Range High at 107.34. While the Election Outcome Is Clearly Dollar-Positive, Particularly Against the Euro, the Greenback Is Set to Contend With Unfavorable Seasonal Conditions.
Using Data Since 2000, on Average the Dollar Has Been Bearish From Late November Into Year-End.
Of Course, Seasonality Is Not the Sole Determinant of the Direction a Currency, so Such Studies Should Not Be Used in Isolation. Instead, Seasonality Can Be a Complementary Tool for Traders.
With EUR/USD Holding 1.05, Which Was Likely the Initial Target for Many on the Back of a Republican Sweep, Profit Taking of Euro Shorts Can Lend Itself to Prompt a Pullback in the USD.
That Said, While in the Short-Run, the Dollar Is Perhaps Exposed to a Cleansing of Positioning, the Longer-Term Outlook Remains Supportive and Thus USD Selling Can Offer Bulls Better Levels to Buy Back.
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(Justin Mcqueen Is a Reuters Market Analyst. the Views Expressed Are His Own.)
((Justin.mcqueen@Thomsonreuters.com))
