Forex Blog: Currency Trading News & Analysis.

July 11th 2005

USD falls on ‘short squeeze’

The USD has been on a tear the last few months, and investors have been wondering when it would end. Fundamental indicators will catch up eventually, right?  The answer, is maybe. The USD has begun to fall, but not for the reasons you might think. The US is still running a considerable trade deficit, and the current economic boom looks more fragile than ever. It is not these factors which are causing the USD to depreciate, however. Rather, it is a "short squeeze."  While a short squeeze can refer to a number of different trading patterns, this particular use of the term refers to the sudden accumulation of short positions in the USD. It seems investors have been anticipating a reversal in the USD for quite some time. At the first signs of weakness, many traders rushed for the exits. It is estimated speculators are currently short a total of $10 Billion USD, which could be enough to drive the USD back to the depths from which it came.  The Financial Times reports:

[A trader] added: “We saw the squaring up of euro-shorts in the low $1.20s, then short-term CTA [commodity trading adviser] accounts got on it at $1.2040. It is largely technical and position driven.” Such a move was always likely as speculators have turned from being short the dollar to building long positions in recent months.

Read More: "Short Squeeze" hits dollar

SocialTwist Tell-a-Friend
Posted by Adam Kritzer | in Investing & Trading, US Dollar | No Comments »

Sponsored Offers

FREE Daily Email Updates

Enter your email address:

Delivered by FeedBurner

Have Questions? Want to Share Your Review?

Be heard. Please share your reviews today!

Neighboring Posts

© 2004 - 2024 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.