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#1
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Re: Predict the direction of the Dollar thread
[ QUOTE ]
EUR/USD. I think the dollar bottoms out next week after the coming rate cut, especially if we get 50 rather than 25. I'd say 1.45 might be a good spot to try and catch a major reversal in the dollar. Thoughts? [/ QUOTE ] I think the USD is going to cause a lot of people a lot of pain in the next couple of months. I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound - USD/GBP is hugely oversold and I could see it bouncing back to 1.85 or less. I think 1.35 to the euro is a reasonable bounceback point. Long term I agree that there's more room to the downside on the dollar, but not before a bunch of leveraged speculators get absolutely crushed by a 10-15% reversal. Seems to me like everyone who wants to short the dollar already has. Mook |
#2
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Re: Predict the direction of the Dollar thread
It's not speculators shorting the dollar. It's foreign holders of dollars selling them. Forget technicals.
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#3
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Re: Predict the direction of the Dollar thread
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. |
#4
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Re: Predict the direction of the Dollar thread
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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. [/ QUOTE ] Nice Analysis. I enjoyed reading it. However, I never said anything about currencies. I didn't even post in this thread. Thank you for thinking about me though! [img]/images/graemlins/cool.gif[/img] |
#5
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Re: Predict the direction of the Dollar thread
oops, you are correct sir. That credit on the Pound should have gone to Barron...
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#6
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Re: Predict the direction of the Dollar thread
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I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound [/ QUOTE ] why would a rate cut cause the dollar to surge? that's ridiculous. |
#7
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Re: Predict the direction of the Dollar thread
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[ QUOTE ] I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound [/ QUOTE ] why would a rate cut cause the dollar to surge? that's ridiculous. [/ QUOTE ] lol no kidding. I think people in this forum who actually know what they're talking about should start posting in neon blue or something so we can seperate it from all the crap |
#8
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Re: Predict the direction of the Dollar thread
Wow this really sucks. Market down 335 and the dollar hasn't budged. The last 350 point move down in the Dow produced a 264 pip range dollar strength bar. Today that same size moved produced no strength at all. I'm cutting this trade at breakeven if EUR/USD gets back up to my 1.4467 entry.
Looks like my logic isn't holding here. The end of the rate cuts and the inflation talk should have helped strenghten the dollar. It didn't. Looks like the dollar is alot weaker than I thought. Also seems the market has absolutely no belief that a rate cut cycle is ending. Bonds went through the roof pushing rates right back down. UGLY. Cutting this one and picking a better time to try this trade. |
#9
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Re: Predict the direction of the Dollar thread
[ QUOTE ]
[ QUOTE ] [ QUOTE ] I share your opinion that after the next Fed rate cut, there's going to be a big upside surge in the dollar vs. the euro and pound [/ QUOTE ] why would a rate cut cause the dollar to surge? that's ridiculous. [/ QUOTE ] lol no kidding. I think people in this forum who actually know what they're talking about should start posting in neon blue or something so we can seperate it from all the crap [/ QUOTE ] It isn't the actual cut that should produce the rally. Clearly everyone knows that a cut in rates weakens the dollar. What is important is that this cut may be the last cut, therefore the dollar may see this and turn higher knowing that futre cuts won't be there. Of course, I put on a trade with this reasoning, but it doesn't look like it is going to hold. I think the currency market still believes the FED will cut more, even though the FED says it won't. The stock market may not share that belief. Sometimes things just don't work out like you think... |
#10
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Re: Predict the direction of the Dollar thread
tippy,
don't you think you are trading on fear if you are going to dump your position at the first chance you get? It appears to me that the dollar is very oversold against the Euro and could possibly make a turn for a little bit. According to the chart right now, it looks like it's making a turn. I'm thinking the reason why the EUR/USD hasn't moved yet is because everyone is waiting to see what the nonfarm payrolls are going to be tomorrow. |
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