the us$ looks bottomed to me. dx04h gapped down to a new low friday and closed higher. looks like possible reversal day to me. xau has also been getting weaker possibly signaling a shift in dollar sentiment. looking for ideas on the best way to play a dollar reversal here?
What my questions were leading to ... was that you could be correct in spotting a short-term bottom for the US Dollar. However, the currency is in a long-term downtrend, and you will be able to make much more money shorting the US Dollar (and buying gold, silver, Australian Dollars, NZ Dollars, Canadian Dollars, South African Rand) over a considerable period, rather than a small gain over a handful of months by buying the US Dollar.
currencies are more like bonds than stocks. they don't go to zero. there is a practical limit to how far they can fall against other currencies. i think both fundamentally and technically we are there. time will tell.
I am certainly not an expert in currencies, but judging by the Commitments of Traders reports (from www.cftc.gov), sentiment seems extended. But, extended sentiment is common in a trending market, if that is what this continues to be. Seems like there could be a sharp pull-back at any time, however. Below are the recent week's statistics, edited for the way I like to look at them: NON-COMMERCIAL LONG | SHORT |SPREADING| COMMITMENTS CANADIAN DOLLAR 17,627 1,029 45 SWISS FRANC 17,217 3,963 10 POUND STERLING 24,923 2,368 10 JAPANESE YEN 62,421 4,185 2 EURO FX 39,854 5,071 613
Wait for something tangible and the form of a key-day or key week reversal [bar chart] signal then build incrementally a Long-US$ position. Until then, the trend is your friend -even if it is looking a bit jaded.
Point taken, however we disagree on how much further downside there is for the US Dollar. I'd say that the losses seen since 2001 are less than half of the final damage, especially against gold and silver.
expert FX trader claims we are not there yet in Euro he does say we are close to getting there in the Pound http://www.fxstreet.com/chat/chatsession.asp