USD - An end-of-month rebalancing bounce in the beaten up buck

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USD - An end-of-month/QTR rebalancing bounce in the offering.

A rise in long-end US yields and the start of month-end rebalancing flows overnight helped the beaten-up USD index, the DXY, bounce from a fourteen-month low.

The rule of thumb for month-end/QTR-end rebalancing flows, whether it be in stock indices, bonds or FX, is to "buy the losers and sell the winners. "

On top of it being a regular month-end rebalance, it's also a quarterly rebalance.

For the quarter, the USD index, the DXY, has lost -4.65%. Within the details, the JPY has been the big winner as it surged 10.07%, while GBP has gained 5.29%. Hence, the expected flows likely to consist of strong USD buying against most pairs, but in particular against the JPY and GBP.

For those interested in a trade into month/QTR end, look for the USD index, the DXY to bounce back towards 101.80, leaning against the double low print overnight at 100.20. A view which is also supported by bullish divergence on the RSI indicator.