amid speculation on the appointment of Masayoshi Amamiya as a next Bank of Japan governor are adding to tailwinds for the dollar. A bevy of Fed members are scheduled to speak this week, with chair Jerome Powell due to talk in Washington on Wednesday.
The greenback has further to gain as bearish currency positions look “stretched,” said Fiona Lim, a foreign-exchange strategist at Malayan Banking Berhad in Singapore. The “potential for further US-China conflict adds to reasons for the dollar to extend its bullish rebound”, she said.Hedge funds have clung to bearish greenback bets for seven straight weeks, according to Commodity Futures Trading Commission data compiled by Bloomberg ending on 27 January.
Selling pressure on the US currency may have exhausted for now, and investors could see a resurgent greenback in the first part of February, Marc Chandler, chief market strategist at Bannockburn Global wrote in a note. “We see this as a counter-trend move and expect dollar weakness to re-emerge.”