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USD : Price action warrants caution, squeeze may extend

FXStreet (Bali) - The current ebbs & flows of the market are being non-supportive to ride the USD bull trend, with an additional long squeeze run seen in Asia.

Today's spike towards 117.00 in USDJPY barely saw any retracement in EURUSD - under a pro-USD environment USD/JPY strength would drag USD higher across the board - with 1.25 not threatened at all, while pullbacks in AUD and NZD vs USD were very limited compared to the more impetuous rises seen at the moment as USD/JPY pares early gains towards 116.00.

EURUSD above 1.25 should be an important driver to set a stronger foundation on USD bear plays at the beginning of the week, with a break below 116.00 in USD/JPY adding further evidence that USD weakness short term may be in store. While the mid term USD bull should remain intact, the fact that we've seen two Fridays in a row USD longs running to the exits - response to decent NFP, upbeat Retail Sales - should definitely warrant caution to play near term USD strength.

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