The dollar index is down by 3.66% on the month, the biggest percentage decline since 2015
The market’s desire to short the dollar for the last month has been something else. Some people I’ve spoken to are struggling to justify such weakness, and they’re probably right. But the thing about the market is that you don’t always need reasons to fit the moves.
When the market is trending in such a manner and the momentum behind it is so overwhelming, it’s best not to fight it. The dollar rout will end when it ends, but for now the market momentum is driving it lower and only the bravest of souls will fight it. It’s not a time in the market for the faint-hearted.
The decline in the dollar this month so far is only topped by the recent monthly decline in 2015 of 3.93%. You’ll have to go all the way back to 2011 to find declines greater than that. And the thing is, we’re not even done for the month yet.
The next level of support is the 61.8 retracement level at 88.42 for the dollar index. And if that gives way, the rout could grow uglier for the dollar.
You would think Mnuchin’s comments should not have such a strong impact on the dollar but when sentiment is so fragile, just about anything would have caused it to break.