It was probably foreseeable that the Dollar correction was waiting for my vacation. But at least I had a few Dollar shorts left. The Dollar-Index (DXY) has been recovering since last week's low on Wednesday (104.636). Is the DXY now running back to the old highs or is it turning before that? Regardless, Dollar currency pairs can also fall when the index rises, which is partly due to the composition of the index:
USDX = 50.14348112 × EURUSD^-0.576 × USDJPY^0.136 × GBPUSD^-0.119 × USDCAD^0.091 × USDSEK^0.042 × USDCHF^0.036
The Euro alone has a significant impact of over 50% on the index. The further weighting results from the formula above. Obviously, the index is currently trading within the 105/107 range. A breakout to the top or bottom of the trading range could set the direction for now.
(source: fxstreet.com)
The Euro had traded below parity against the Dollar shortly before my vacation, but never closed below it. Either way, I'm almost 100% sure we haven't seen the yearly lows in EURUSD yet. Below the 50 ema (1.0322) and the 1.0350/70 resistance zone the short scenario is intact from a technical perspective, above the 1.0400 mark I would cut Euro shorts at the latest
Good luck,
Sebbo