U.S. Dollar Rises Overnight on Short-Covering

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The U.S. Dollar is trading slightly better this morning versus most major currencies after the bashing yesterday sent the trade weighted Dollar index to a 15 month low. Short-term indicators are oversold which could lead to a short-covering rally today.

Yesterday the Dollar was under pressure because over the weekend the Group of 20 decided not to issue a supportive statement and instead agreed to support continued economic stimulus. This led to a move by investors into riskier assets and away from the U.S. Dollar. This trend is expected to remain in the market for the foreseeable future as long as U.S. interest rates remain the lowest in the world. Investors are once again treating the Dollar as the world’s carry currency.

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