Credit: REUTERS/DADO RUVICOct 27 (Reuters) - Dollar bears may get more attractive levels to sell if the run-up to the Nov. 3 election or the result itself produces a stocks swoon, but any bounce is expected to be modest, continuing a trend since March.
Recoveries in the dollar index during setbacks in the S&P 500 have become weaker since March's initial pandemic panic and scramble.
The safe-haven dollar's short-term correlations to S&Ps have largely been negative. But the last two times the 10-day correlation went positive, before Friday's positive print, back on Sept. 2 and June 5-10, it presaged sharp stocks selloffs and mild dollar recoveries within the downtrend from March's peak.
Aside from S&Ps failing this month to reach September's record highs and Monday's break below the 50-day moving average, the dollar index has been supported by long-term Fibo and uptrend line props hit in September, as well as consolidation of oversold weekly oscillators and hefty net IMM spec shorts.
Selling rallies looks attractive while the index remains below the 100-day moving average, 94.36 last, with the 2018 key Fibo low at 88.25 the target if September's 91.74 nadir is broken.
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(Randolph Donney is a Reuters market analyst. The views expressed are his own.)
((randolph.donney@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
