The dollar is a high-carry currency... Among the currencies of the industrialized countries (G10 FX), the US dollar is the one with the highest interest rate. And it's going to stay that way for now. Isn't that in itself a strong argument for a strong dollar?
As a matter of fact, it is. However, this fundamental advantage of the dollar has long been priced into its exchange rates. In the course of 2014, it became foreseeable that the Fed would raise US interest rates in the not too distant future, while other central banks (e.g. the ECB and the Bank of Japan) would continue to remain ultra- expansionary for a long time – in some cases more and more. This is why the US currency appreciated at that time. Previously (2009 to mid-2014), the dollar index traded around 80, since the beginning of 2015 it is moving in the area near 95 (refer above chart).
Buy 2m 1.1320 EURUSD put; sell 1.16 EURUSD call for net cost of 11bp. Spot ref: 1.14 levels, while simultaneously maintain shorts in EURCHF at 1.1244 with a stop at 1.1469.
Alternatively, we advocate initiating longs in EURUSD futures contracts of Feb’19 delivery as further upside risks are foreseen in near terms. Simultaneously, shorts in futures of April’19 delivery. Thereby, one can directionally position their FX exposures. The directional implementation of the same trading theme by further allow for a correlation-induced discount in the options trading also if you choose strikes appropriately. Courtesy: Commerzbank
Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards 70 levels (which is bullish), while hourly USD spot index was at -90 (bearish) while articulating (at 08:34 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex


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