Yesterday’s noted that the is very oversold and likely due for a reversal. To wit:
The dollar is deeply deviated from its longer-term mean, oversold on multiple levels, and has been basing since April. As noted last Friday, the incredibly negative bias and position against the dollar are excellent contrarian signals for a counter-trend rally at some point.
The Commentary also noted that foreign central banks most often hold reserves in dollars, bonds, and . Thus, weakness in one or two of the reserve options can lead to strength in the other(s) as the banks try to maximize their returns. Per the Commentary:
Central banks and foreign holders of reserve currencies have three primary choices to store foreign reserves: US Stocks, US Treasury Bonds, and Gold, as each is traded in US Dollars. Gold has been a primary choice for reserves over the last two years due to the weakness in the dollar. However, if that reverses, we could see a…
