"I think people are trying to figure out, after last week, whether or not that was the signal the (U.S. dollar) is headed lower," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.Warning: I am not a currency expert, BUT while the media has been calling the recent dollar move a sell-off (or Euro rebound) that is in regards to a VERY short time frame. Over the longer term, the Euro is still down 10% over the past year, thus don't write-off a continued sell-off / Euro rebound from here.
"Right now, it's not clear," he said.
While some analysts have argued last week's turn against the dollar reflects a pivotal shift in sentiment, uncertainty continues to cloud prospects for the economy, equity markets and the U.S. currency, and the dollar could rebound from recent selling, Watt said.
A report from Custom House, a currency services firm based in Victoria, British Columbia, said there may be a slight sense in currency markets that the relentless dollar selling last week was a bit overdone, and traders may not be quite as confident holding short dollar positions now as they were last week, when it seemed to be a one-way bet against the U.S. currency.