FXstreet.com (Barcelona) - The Dollar closed the week at the lowest level since May 2005, Nicole Ellott, senior technical analyst at Mizuho Corporate Bank affirms: Bearish momentum is also stronger than it has been in ages. Funnily enough the US dollar is not particularly oversold and at-the-money implied volatility looks set to burst even higher. Note that open interest, while rising very slowly, is about half of last year's peak suggesting that many in the hedge fund community have given up on the 'carry trade'. Expect a downside lunge this week.
Concerning stratey, Elliott advices: Sell at 106.50/107.00; stop above 108.00. Add to shorts on a sustained break below 106.35 for 106.00, then 105.50/105.00 which is unlikely to give way on a first attempt.