Key Day Reversals in the USD Index, EUR/USD and USD/CHF on Friday imply profit taking after the recent USD rally allowing momentum to unwind from extreme levels. The absence of evidence of divergence implies a corrective move fuelled by profit taking, which isn’t supported by CFTC stats but was a theme from our client base last week in EUR/USD. 10y US yields are also unwinding following their recent fall. This week we are looking for better levels to buy both the T-notes and the dollar.
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Barclays Capital