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US Dollar, The Next Short Squeeze Target? Why It's Impossible

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US Dollar, The Next Short Squeeze Target? Why It's Impossible

The GameStop Corp. (NYSE: GME) short squeeze story — which has held its own in headlines, though without any real impact on the market — has recently been put aside. However, on some US financial websites, another short squeeze has come to the fore — the US dollar.

Bearish Stances On US Dollar: Since Joe Biden won the White House three months ago, analysis and forecasts about a U.S. dollar decline have spread, led by the massive American debt spending to support the incoming trillions of stimulus — with the Federal Reserve ready to counter any tension on the rates — and also by Wall Street fatigue and weaker macro data, as some alleged. For a few weeks, the greenback actually pointed south, especially against the euro, and then rose again towards 1.20. This prompted forex traders to take a short stance, with short positions on the futures market estimated by Reuters at 34 billion dollars - the highest level in a decade.

US dollar is not a penny stock: The combination of strong Wall Street resilience, strong economic data, as well as 10-year and 30-year T-bond yields unwilling to bow their heads has caught the bears off guard. If they decide to give up and hedge their positions, this would give the U.S. dollar a further boost. Is this enough to talk about a short squeeze? Let's be serious, the forex market is the largest one in the world, with 6,600 billion dollars changing hands every day, and the most traded currency is by far the US dollar, which is not a penny stock.

This article originally appeared on Financialounge.com and was translated from Italian to English. It does not represent the opinion of Benzinga and has not been edited.

See Also: The Rise And Fall Of Meme Stocks

 

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