Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Currency Market: US Dollar Index Breaks Out to New Highs, Confirming Upward Trend

By

The US dollar bull market appears to be just getting started.

PrintPRINT
MINYANVILLE ORIGINAL The US Dollar Index has confirmed the bull market trend higher by breaking out to new 52-week highs, and I continue to think this could just be the start of a huge move higher. With the January highs around the 82 level out of the way, that level should now act as support on any ensuing pullbacks. This move confirms the inverse head-and-shoulders pattern that meets my intermediate projection of 90 on the US Dollar Index. This also gives some weight to the double-bottom pattern confirmed around 75, which could provide a target of 105 once the '08-'09 crisis highs are taken out around 90. See the setup below.


Click to enlarge

The continuing euro death spiral has obviously been the major tailwind for the US dollar rally, and I have been looking for other ways to get euro short exposure against some currencies that might not have moved as much yet. One currency cross that I thought looked interesting is the EURNOK pair. This gets you short the euro and long the Norwegian krone, which is typically viewed as a relatively strong Scandinavian currency. It looks like this cross could really plummet if it breaks the 7.50 level.


Click to enlarge

Another interesting currency cross that I think looks compelling here is the USDHKD. This gives you long US dollar exposure while short the Hong Kong dollar. I think this trade could start working if China really is slowing, and I like anything that gives you US dollar long exposure. As you can see in the below chart, this cross has been supported historically around the 7.75 level, and now that it is turning up at the 50-day moving average just below the 7.77 level, it looks to me like a good risk-reward bet on the long side. Good luck out there. Hopefully, you have been enjoying this US dollar rally, and if not, start buying pullbacks!


Click to enlarge
Positions in GBP futures, EURUSD, GBPUSD, EURCHF, USDCAD, GBPJPY, EURCAD, USDDKK, EURNOK, AUDCHF, EURNZD, USDHKD.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE