Push above 97.987 and the 50-day moving average at 98.355 comes into play, followed by the 200-day at 98.585. Right now this looks like short-covering, but reclaiming the 200-day would turn the dollar bullish. Watch for strength over 97.987 and weakness under 97.522.
Safe-Haven Flows Drive the Bid
The dollar’s up 0.7% for the week, near its highest since late January. Stocks, crypto, and metals got crushed this week as investors unwound crowded positions. AI spending concerns triggered the selloff, and the usual safe havens — gold, bitcoin, the yen, the franc — aren’t getting bids. The dollar’s the best option left.
“For FX traders, areas of safe haven seem to be a little bit in short supply,” said Fiona Cincotta at City Index. “So the dollar is sort of the best bet.”
Trump’s nomination of Kevin Warsh as Fed Chair added fuel. Warsh isn’t seen as a rate-cut advocate, which keeps the dollar supported.
Three Shocks Hitting at Once
According to Saxo’s Charu Chanana, the market’s pricing Big Tech capex scrutiny, AI disruption risk in software, and a liquidity flush from silver-driven margin calls. This looks like a positioning flush where crowded exposures are being de-risked across assets.
Next week’s payrolls report is the next catalyst. Labor data this week suggests the economy’s losing momentum. Traders are pricing higher odds of rate cuts in the first half of the year. Major downward revisions to payrolls would add pressure on the Fed to resume cuts.
