Chance of medium term bearish reversal in Dollar Index is quickly surging as markets are now very aggressive pricing in large rate cuts by Fed. As fed funds futures imply, there is 100% chance of a -50bps cut to 1.00-1.25% this month. More importantly, there is now 85.5% chance of at least one more cut to 0.75-1.00% after June FOMC meeting.
DXY dropped sharply again overnight to close at 97.36. 61.8% retracement of 96.35 to 99.91 at 97.71 was taken out decisively. And focus is now turned to 96.35 key support. Break there will confirm medium term topping at 99.91. Deeper fall should at least be seen to 38.2% retracement of 88.25 to 99.91 at 95.45. There is risk of further decline to 61.8% at 92.70, depending on the reactions fro 95.45.
