In 2004, after getting stopped out twice with no logic following the upmove, I backed off completely and played pairs that had a right to move up against the dollar. Like the CAD. These calls for "imbalances" to correct are always hilarious. Do you know what it would take for the imbalances to be corrected? Oh, I don't know, perhaps a Euro move to 1.50? Do you have any idea what that would do to the EZ economy? How about a Loonie of .90? Hell, Canadian manufacturers are already screaming about their ability to compete. Or maybe a yen of 100 would be better? Or 93? I'm sure Japan wouldn't mind that happening! This is pure stupidity. Everyone is focusing on the US imbalances, forgetting that there are massive structural problems in the EZ that are only ignored as long as the EZ shows signs of possible growth. And the only way they can show signs of growth is to NOT have their currency explode off the radar. It's a double edged sword. I saw a news release today about how talk is circulating about the ECB perhaps hiking a 50bps rise now. Haha! What a good laugh. A month ago they weren't sure about moves at all, and Trichet himself said "we'll have to see how things go, but we won't be embarking on a steady rate rising campaign". Now Captain Caution is gonna pull a 50bps trigger? Riiiight. People are so stupid when they're in the "herd" mentality. Sure, there's money to be made when following the stampede. But people inevitably get crushed when the stampede suddenly turns into a different direction. Fear is ALWAYS a greater motivator than greed.
Incidently, I would like to restate I have no open EUR/USD positions at the moment, and no short USD positions other than a few long term ones against the NZD. I could care less if the Euro goes to the moon. I just want to sit back and watch the carnage in the EZ when it happens.
I read on a news feed this morning that some analysist are now targeting 1.2750. Based upon a chart only perspective, I was thinking 1.25 would be the top. Now I'm hearing this.
I agree. German ministers were shouting for the markets when the EUR/USD was at 1.3000+. The EZ trade deficits soared too. But that doesn't prevent me from trading LOL. I still like AUD/USD best.
This is very simple. I think the Full Moon is tommorrow. Just sell on this cycle. Plot the moons you will be amazed.
I think we have put in a top today at 1.2470 - if it retraces up to this level it is a good area to short. Normally USD/CHF would put in a lower low today in sympathy but it didnt. That indicates weakening momentum at the extremes to sell the dollar.
All of this unexplainable "anti-dollar sentiment" in the face of unexpectedly positive U.S. economic reports makes me wonder: maybe it is true that the market goes where it will, and that the news stories are just adapted to fit what's happening in the market. It certainly does not seem to be the case that economic reports are driving price changes. Now that we've touched the top of the EURUSD channel (or one of the main channels people draw anyway), it's possible that soon the dollar will start strengthening again. If so, I suppose it's time for the media to start talking about profit-taking on the Euro, about the "new dollar bulls", how the Fed really will increase to 5.25%, how the currency adjustments that need to be made have more to do with China, Japan and Korea rather than Europe. Ando so on, and so on...until the dollar starts weakening again and we can begin the cycle all over again. Another thought is: maybe the exchange rate is like pressure on tectonic fault lines. The market can push price past equilibrium (based on economic realities), but pressure builds the further price moves away from that neutral zone...just like pressure building between tectonic plates. "Market sentiment" can only hold back the pressure for so long, however, and once whatever is pushing prices away from equilibrium gives way, the shift back to equilibrium is likely to be swift and violent (analogous to an earthquake). Or maybe crazy market gyrations just cause traders to come up with crazy theories.
Added to short at 1.2457, i just feel things are indiscrimantely bullish at the moment, against a firming US backdrop. As Eur/GBP approaches 0.70 it will sell off soon.
Even Fed BB release, confirming an economy getting stronger, did nothing to help the USD. Wackos out everywhere. I like the fault line theory, though!