Betting against the USD has been just too easy; we're due for a major shafting of non-insiders. The Dollar Index components are looking a little fragile up here - the Canadian Dollar is falling faster than the USD, the JPY is looking iffy, the British Pound is floating around in the stratosphere with virtually no support in sight, and even the mighty Euro has fulfilled its chart promise by going 124+ ( nearest support 118.2 ). The $CRB is in a wildly broadening formation and could easily correct in a major way (copper is going straight up after gapping a few days ago!). We all know the trade imbalance story, but the trade imbalance was about the same June-Sept. when the USD rallied from about 92.4 to 1.00 . It seems to me very little has changed since that correction to 1.00 . Also, everybody knows the USD is going down; that has to be a red flag. A Dollar rebound would hurt a lot of people (including me) ; maybe it's something to be on the lookout for. Maybe not. What do I know - I'm always anticipating catastrophe.
Markets have a tendency to overshoot and I think currencies are a prime example. The Yen once rose to near 80 to the dollar only to reverse to 145 a couple years later; I don't think any amount of fundamental or technical analysis could have predicted the extent of those moves.
A Dollar bounce in January as equities build on gains above Dow 10,000 seems very possible. Then back down to set new lows by Feb/Mar. Just an opinion.... (I never trade on my opinions, only what the chart is doing at any time!!! The market really doesn't care what my opinion is. ) ramora
True. This 'overshooting' tendency can really screw up your faith in your analysis. Many times I've folded just before my trade proved true. Good luck.
Sounds plausible to me. Check out the Natural Gas futures chart for a somewhat similar pattern to the one the USD's been in lately.
75% rule : If three-quarters of traders/analysts/experts are certain of X, put your money on minus X .
The dollar had very strong moves during holiday weeks in the summer going from 1.17-1.08 against the euro for example before resuming the downtrend. It is also getting to levels where US assets look attractive to foreigners.