BUZZ-COMMENT-Could dollar's decline be coming to an end?
Feb 24 (Reuters) - The U.S. dollar has been in a negative cycle in February, but there is a subtle development in the speculative long position that could well provide the room for the greenback to recover.
The speculative long position - derived from net contracts of International Monetary Market speculators in the euro, yen, pound, Swiss franc, Canadian and Australian dollars - fell.
For the week ending February 18, the value of net positions held by speculators dropped to $20.88 billion long from $24.11 billion a week earlier. The speculative long position peaked at $31.83 billion in January.
A smaller speculative long position means there is likely to be a decrease in offers and vulnerable sell stops that would usually hinder gains.
FX traders should watch for where the USD index, which tracks the greenback against a basket of six major currencies, closes at the end of this week in relation to the broken 106.342 Fibo: a 38.2% retrace of the 100.150 to 110.170 (September to January) rise.
Failure to close under 106.342 Fibo would be a bear trap, set when a market breaks below a technical level but subsequently reverses, which is usually a bullish sign. However, a weekly close below 106.342 Fibo would hint at steeper dollar losses.
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