This dollar rally is full of hubris. Sell this sucker hard. Scale in every 50 pips double down. The US is about to enter a shit storm.
I had this conversation with another dollar bear earlier today. Without the knowledge of what exactly you are trading, shorting the dollar sounds great, after all the US is printing money like there's no tomorrow, right? So automatically, printing money, inflating the dollar etc etc sounds like a sell. Now what I told the other guy, and you need to fully understand guys, is the dollar is not like a commodity that floats in value on its own free will. The US dollar index is a cross between other currencies and therefore you must also look at the cross-currency countries that have the biggest impact on the weighting. It happens to be the euro that hold the lions share in this valuation. So to be a dollar bear, you need to weigh your thoughts on how the US is faring vs. the euro zone and the UK. I will gladly take the other side of your dollar sell, I think the eurozone is in a worse shit-storm than we are at the moment, and therefore I believe that their currencies will remain weaker than ours, thus boosting the dollar index. If you already knew this, which it doesn't sound like you do, then accept my apology. Otherwise, people on this board, PLEASE study and fully understand what it is EXACTLY that you are trading. http://www.akmos.com/forex/usdx/
I'm not talking just one cross pair. I'm talking the dollar index. You can access this using futures: DXY or IDX. The US government is going to need to finance more bailouts for banks. The federal reserve is going to open the money gun even more.
This same line of thinking cost the Peter Schiffs of the world a LOT in '08. They (and you) are completely right on the fundamentals. Regardless, the DXY daily chart still looks mighty healthy. At least wait for it to break trendline/200-sma support at 83 before shorting.
PAPA ROACH wrote: <i> I think the eurozone is in a worse shit-storm than we are at the moment, and therefore I believe that their currencies will remain weaker than ours, thus boosting the dollar index.</i> Would you mind elaborating on your thoughts? Why do you think the Euro is in worse shape than the Dollar? I see the the US spending a lot of money in stimulus, bailiouts etc. As far as I can tell, Europe is not doing the same. Wouldn't this imply that the Euro should get stronger than the Dollar? What am I missing? Also, when you say that you believe that the Euro will remain weaker than the dollar, what is your time frame? Short- term or long-term? Thanks in advance.
Yeah, but I'm saying it 'now', when the dollar index is hovering around the 87 area, not in the 70's. It's all about timing. I'm saying now is the time. But you have to scale in. Not all in right now. It's going to rally for the next few days, which in my opinion, will be the trade opportunity of this year. Short this sucker.
4.7 trillion was lent to Eastern Europe. 3.7 of that was from West European nations. This money will never be able to be paid back since the loans were denominated in USD, CHF and EUR which have all risen 30-50% against many East European currencies. The fundamentals are not clear at all in this case. Anybody who thinks that have it all figured out will pay for it with their wallet.
I keep hearing everyone say to short the dollar, too. However, according to the commitment of traders report, the smart money (commercials) are long the US dollar index (relative to their position any time in the last year). Normally, the dollar should go down after printing over a trillion new ones, but the rest of the world's economies are in bad shape as well and the dollar is still considered to be a safe haven. If you want to short something, short the 30 year T-bonds like the commercials are doing. The dollar may be strong now, but no one has faith that we will be able to pay off our debts in the future. TBT is the vehicle I am using to short treasuries.
I know what the dollar index is, apparently, even though in my post above in which I tried to educate you guys a little, you do not. Since you seem to not grasp what I tried to tell you, I'll try again in the name of education. The dollar index is a basket of currencies that cross the dollar. The largest single weighting is with the euro, 57.6% to be exact. So by in large, when you trade the dollar index, you are trading against the euro. The yen is the second largest weighting at 13.6% and the pound is next at 11.9%. Add the euro and the pound together (they are basically the same economy), and you have 69.5% weighting. Now to say this is not a cross is absurd at best. I'm not trying to rip anyone, I just want you guys to research what the hell you're trading.