The US dollar has dropped, while Cable has recovered over 60 pips from earlier lows, now down only 9 pips for the day. This shift is part of a larger decline in the US dollar seen in the last hour, reversing previous USD gains except against the yen. Recently, there have been several attempts to sell Cable over the past week, but buyers have jumped in each time. This includes a dip after the non-farm payrolls report. Although there’s fundamental news that usually supports the US dollar, sellers keep appearing, indicating a possible change in trends for the currency. The reasons for this ongoing shift aren’t completely clear, but it continues even as US tech stocks hit new highs. Current market price movements show a consistent departure from expected USD strength. The US dollar has dropped sharply, losing ground almost everywhere except against the yen. Sterling has made a strong comeback after an earlier dip, gaining back over 60 pips. It now trades just slightly lower, indicating a clear rejection of those previous lows. The significant aspect here is not just the bounce, but the pattern it represents. In recent trading sessions, there have been repeated efforts to lower Cable. These selling waves, especially after major reports like the non-farm payrolls, have consistently failed, with buyers stepping in forcefully again and again. This is more than just reacting to headlines; it suggests something deeper is happening. Despite strong economic data from the US, which would usually support a rising dollar, the market isn’t responding as expected. The dollar seems to have fewer supporters, even as American stock markets rise, mainly due to tech. This situation would typically increase demand for the dollar, but now it hints at stronger interest elsewhere. Overall, price actions no longer align with how they did six months ago. This change may be technical, but it feels behavioral. Every time the dollar tries to recover, it slips away quickly, showing less strength with each rebound. This suggests current positions in the foreign exchange market are becoming less favorable for the dollar. Powell’s recent comments haven’t changed this trend, nor have strong inflation reports or recent bond movements, indicating these flows might be driven by larger factors than a single report or central bank statement. For those involved in short-term holdings or swaps, this is important. Previous resistance levels are failing to hold, and the market’s reaction to macro data is becoming weaker. This inability to gain momentum from supportive catalysts makes directional clarity difficult. Charts where prices deviate from fundamentals often lead to sharp reversals or gradual moves in the opposite direction. Yellen’s remarks this week didn’t raise concerns, yet the market continued to move. Foreign inflows might be seeking diversification, or medium-term expectations may be changing as we move beyond this rate cycle. Regardless of the reason, prices show that some positions may no longer be sensible. As traders, when we see movements like this, especially after strong data or pressing narratives, we turn our attention to the options market. Is implied volatility changing? Who is bidding on risk reversals? These quieter signals can be more revealing than speeches or unexpected news. What we observe suggests a greater willingness to reduce USD exposure rather than pursue it, despite optimism in equities and stable bond yields. That’s significant. In the upcoming sessions, rate expectations will continue to shift. We may see more moves based on carry trades rather than outright growth. This doesn’t diminish the dollar’s usefulness, but it alters our approach to currency pairings involving GBP, EUR, and AUD. If positioning remains skewed, taking shorter-term risks becomes trickier. Understanding which levels have been repeatedly defended is crucial now—not just for support and resistance—but to see where the market is still trying to find agreement and where it is no longer responsive. This is the only guide we need right now. Observe how we react to known factors, not the factors themselves.

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