Dollar Breakout?
Earlier this morning, we discussed the concept of oversold, specifically looking at bonds. Let's now review the same concept, as applied to currency -- specifically, the U.S. greenback, via this chart from Mike Panzner.
With sentiment towards the dollar almost universally bearish, is it any wonder that the market appears to be setting up for a major rally in the greenback? Some fundamental factors that might be behind the move:
-- the prospect that U.S. interest rates are poised to rise (further), rather than decrease as some had been expecting up until only recently
-- "safe haven" buying of the greenback on the view that market conditions (e.g., volatility) and geopolitical developments are becoming increasingly unsettled
-- profit-taking by U.S. investors in foreign securities, who've garnered substantial gains in recent months, with the procedes being repatriated to the U.S.
-- indications sizeable short positions in the U.S. dollar
-- chart-related buying
What does this mean? Well, let's have a look at a chart:
Nice work Mike -- thanks!
Thursday, June 14, 2007 | 10:55 AM | Permalink
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Why cant it just trade sideways Barry? I see some resistance in the high 83's to low 84's (prior bottoms). 80 - 85 is my trading range guestimates...I think it would be helpfull to look at a much longer term chart...say back to the early/mid 90's.
Posted by: Fred | Jun 14, 2007 11:24:21 AM
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