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I don't know guys. I fired in a single bullet on the EUR/USD at 1.4387 near the close. Just wanted to get a position started. Looking to get it to 10 contracts by the end of the week. The Dollar should have really weakened past 1.44 Friday and it didn't, espcially given that move in gold. It really seemed to be stuck around 1.4380-90.

As for why I think it is going to turn, the FED has been the largest reason for the dollar tanking. Look at the move from Aug 16, straight in the tank. We are down to a rate of 4.75, with a cut coming this week. I expect we get a cut of .25, but it could be .50 and done. The reason for these latests cuts isn't fundamentally based, they are the FEDS attempt at softening the bursting housing bubble and easing the effects of the subprime mess. Getting down to a rate of 4.25 and not having that justified by general market factors is not going to hold. You will see adverse effects of the artificially depressed rates. The first place you are going to see it is in commodities. Look what happened to gold Friday, up $17.00. Gold is a leading indicator of inflation. These cuts made by the Fed to ease housing and the credit crunch are going to produce serious inflation pressures. And we all know what happens to rates when inflation rears its ugly head. If you don't, check out the 70's and 80's, paying specific attention to oil prices during that time.

The Fed is solving one problem, but creating another. A little inflation is good, but too much is bad. If inflation gets out of hand and the Fed has to take back these cuts, the stock market will tank. I just don't think there are too many more cuts left in the FED. Their hands may simply be tied by inflation possibilities. Since the Fed has been the main cause of dollar weakness, we may be near the end of a weak dollar.

Keep an eye on the big multinational companies this week. The ones who get most of their money from export, especially tech. If the market thinks the FED may be near the end of the easing, it will show up in these stocks.

It is a tough spot though, because you can never be too sure where we are in the cycle. Timing a turn is tricky.

I'm hoping for a nice cut and statement out of the fed this week as an excuse to continue building a dollar position.

Italian FX, I agree on the pound. A long trade probably does make more sense there. I'm not as familiar with the GBP/USD pair, so I'm going to sacrifice a little to stay with familiarity.