AI
Sunday, March 14, 2010 4:34:37 AM
Re: USD, EUR, UUP, UDN - At Rest, Or Set TO Resume Long-Term Bearish Trend?
At this point, the USD has pulled back significantly to validate a short-term bullish trend (GREEN channel), which formed since the low of DEC 2009 - see chart #1 below.
FUNDIES:
Despite bullish fundamentals, the recent pull-back came as a great surprise, considering that the Euro counter-part has been battered by major fundamental threats within the Eurozone. As the financial ministers are meeting next week, all ears may turn to some explicitly supportive comments towards the Greek situation. If not, there may still not be enough fuel to propel the USD to higher heights. Some more fundamental news needs to come from the US to give it an extra humpf and allow the USD to remain ABOVE its current technical level.
TECHIES:
While the decline concluded the week right at the bottom of the short-term bullish channel, a relative strength expression of $XEU vs. $USD points to a similarly relevant event: As the USD lost ground against the EUR, the relative pair reached a HIGH right at the upper border of the bearish channel (right at the 1.726 relative strength value) in chart #2 below.
Looking at a different perspective, the directional PowerShares Dollar index Bullish/Bearish Fund chart below (chat #3 expressed also in relative strength) jump down to the bottom border of the short-term bullish channel without any clear indication that this down-trend trend has concluded. In fact, the secondary indicators in any of these charts are not reassuring to the USD bulls.
OUTLOOK:
The question now remains: Is this decline a recoil prior to a new uptrend? Or, is the long-term bearish trend taking over as it prepares to push the USD to lower lows?
In my opinion, things could not get any worse in the European countries, however, another sentimental development seems to be shaping up in the Forex world: Investors all over the globe may gradually flee the USD as the supreme currency and turn to higher yielding sources. Although this concept may not be at play on a day-to-day basis, this is certainly something to keep in mind.
For the moment, the USD is getting higher fundamental marks from an economy that seems to be recovering sluggishly, but still positively, and this against the EUR which is battered by a patchwork of countries whose stressed economies has gone so far as even questioning the validity of a common currency. While the United States of America tries to re-establish a stable stance, the United States of Europe is shaking and knee-wobbling. This alone is good enough to believe that USD will remain a favorable currency for the time being, IMHO.
USD: 12-Month, DAILY Chart:
XEU:USD (Relative Strength) - 12-Month, DAILY Chart:
UUP:UDN (Relative Strength) - 12-Month, DAILY Chart:
- Dalcindo
At this point, the USD has pulled back significantly to validate a short-term bullish trend (GREEN channel), which formed since the low of DEC 2009 - see chart #1 below.
FUNDIES:
Despite bullish fundamentals, the recent pull-back came as a great surprise, considering that the Euro counter-part has been battered by major fundamental threats within the Eurozone. As the financial ministers are meeting next week, all ears may turn to some explicitly supportive comments towards the Greek situation. If not, there may still not be enough fuel to propel the USD to higher heights. Some more fundamental news needs to come from the US to give it an extra humpf and allow the USD to remain ABOVE its current technical level.
TECHIES:
While the decline concluded the week right at the bottom of the short-term bullish channel, a relative strength expression of $XEU vs. $USD points to a similarly relevant event: As the USD lost ground against the EUR, the relative pair reached a HIGH right at the upper border of the bearish channel (right at the 1.726 relative strength value) in chart #2 below.
Looking at a different perspective, the directional PowerShares Dollar index Bullish/Bearish Fund chart below (chat #3 expressed also in relative strength) jump down to the bottom border of the short-term bullish channel without any clear indication that this down-trend trend has concluded. In fact, the secondary indicators in any of these charts are not reassuring to the USD bulls.
OUTLOOK:
The question now remains: Is this decline a recoil prior to a new uptrend? Or, is the long-term bearish trend taking over as it prepares to push the USD to lower lows?
In my opinion, things could not get any worse in the European countries, however, another sentimental development seems to be shaping up in the Forex world: Investors all over the globe may gradually flee the USD as the supreme currency and turn to higher yielding sources. Although this concept may not be at play on a day-to-day basis, this is certainly something to keep in mind.
For the moment, the USD is getting higher fundamental marks from an economy that seems to be recovering sluggishly, but still positively, and this against the EUR which is battered by a patchwork of countries whose stressed economies has gone so far as even questioning the validity of a common currency. While the United States of America tries to re-establish a stable stance, the United States of Europe is shaking and knee-wobbling. This alone is good enough to believe that USD will remain a favorable currency for the time being, IMHO.
USD: 12-Month, DAILY Chart:
XEU:USD (Relative Strength) - 12-Month, DAILY Chart:
UUP:UDN (Relative Strength) - 12-Month, DAILY Chart:
- Dalcindo
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