Been noticing for a long time that the US dollar has declined and continues to do so. And been reading a lot from analyst to economist to CFOs that it will just go down. And latest survey says that the US is in a reccesion now and will not recover till around next year???
And this is quite confussing for me. SHould I believe the educated economist with thier Phds and years of experience? with the hope of pips on my account, or should I trust my charts more?
Which should I trust more? fundamentals or technical?
most will say both… Though my problem is most of the time its hard to achieve balance.
It realy is very scary when you are risking real money to back your beliefs.
Why, if the dollar goes down, you still make money.
You have to listen to both, fundamental and technical.
Today there was a big push up for the eur/dollar, it was stagnating towards the 1.55 level, it formed a triangle and broke out in the way of the trend. Precicely according to some technical reports and technical analysis.
The way I see it we are in wave 1 of a new cycle which started at 1.5283.
I see it getting a lot worse before it gets better.
However, the FED might keep it straight for a while, but the US economy is in a big hole right now, they are also running out of resources.
The US economy is sick, before we could fix it with a stomach medicine, but I think we won’t be able to stop it from vomiting this time.
Either way is good to me.
Find support and resistance lines, and ride the trend.
I heard on the radio (BBC World service) an interview with someone who knew a lot about the world economy (this doesn’t carry much weight, I know, because I can’t remember who it was, or what the reasons were) and he said, the American dollar was on a slow slide which will continue for years to come.
The Chinese have a lot of American dolllars.
Here in NZ the NZ dollar is really strong against the American dollar, which makes it really hard to think continuing to go short on the American dollar any longer, let alone over the next few years is likely to be a sound strategy, even though that is what world economists say.
I guess a more likely bet is shorting the American dollar against the pound or the euro.
If the Chinese currency floated that would shoot up… does anyone know if thats going to happen soon?
Lots of things can go south on the dollar.
What to think if OPEC lets go of the dollar and adopts the Euro?
Or if China decided to sell their dollars. They are the onces buying our deficit. We owe so many trillions to the Asians, its not even funny anymore.
If the US does anything dumb politically and get the Chineze mad, and they decide to sell their dollars, we are in for it. Russia had already sold many of their dollars. Many things can go wrong.
This week seems like one of the those rare times when both charts and economists are saying the same thing; that the dollar will continue to sink. And boy has it done in the past few days (well, years but especially this past week).
Keeping an eye on the fundamentals is always good, but following the analysts is a road to ruin. Just look at UBS bank for example - their analysts have been telling their clients to buy dollars since October. And last week, the head of UBS bank said we’ll never see higher the 1.5200 in EURUSD (it’s at 1.5600 as I type). Sadly, they’re never wrong enough of the time to make it worthwhile trading the opposite of what they say, so best to stick to the charts…