Predict the direction of the Dollar thread

[PLOlover]

you think the dollar will get stronger if the fed creates more credit (more dollars)? I don't get it.

I mean it's pretty obvious fed/gov have decided to tank the dollar to and keep rates low,

rather than have high rates and stronger dollar.

[ActionTodd]

I think USD will continue to go down

[DcifrThs]

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Lets hear some opinions for the next week and month. Use the DXY or your favorite pair.

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?

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i think this would be a far better bet vs. the pound. germany remains a powerhouse.

britain, on the other hand, is fairly fragile at this point and after the next rate cut (as i mentioned in the other thread), i'd look to short the GBP/USD pair.

fundamentally it is a much better bet.

Barron

[PRE]

This economy is in terrible shape and you can thank the government and Fed for it. It will continue to decline.

[Mook]

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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?

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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

[pig4bill]

It's not speculators shorting the dollar. It's foreign holders of dollars selling them. Forget technicals.

[tippy]

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.

[ItalianFX]

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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.

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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]

[tippy]

oops, you are correct sir. That credit on the Pound should have gone to Barron...

[stinkypete]

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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

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why would a rate cut cause the dollar to surge? that's ridiculous.