Citi: Hawkish relative to positioning

From the FXWW Chatroom: We started to discuss the concept of “hawkish relative to positioning” concept yesterday and I think the price action yesterday was extremely supportive of that idea.  Yellen’s commentary could very easily be interpreted with the lens of “there’s nothing new here” if the market was loaded up with USD longs but the way markets have behaved suggests to me that FI shorts have been trimmed and USD longs are modest.  This probably means the USD has a bit more room to rally but I’m not convinced there’s a sea change here in the macro backdrop.
Instead, we’re still somewhat defined by ranges though it does appear that slow/steady breaks are emerging among the majors.  EURUSD is slowly trekking toward 1.05 but no one forgets just how resilient EUR has been down at these levels.  USDJPY has retaken the 114-20-50 region but we’re only sitting on top of the top end of recent ranges (just barely) and GBPUSD is breaking the recent lows, but has generally been supported on meaningful dips.
What all this likely means is that there is a tremendous amount of caution being exercised by macro players.  This caution is definitely warranted.  Small USD bullish bias at these levels but I think you buy dips instead of rallies at this stage.

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