The last two days “rocket ship” strength in the USD , and in turn further weakening of the Japanese Yen pretty much blew my trade plans out of the water – as I had been positioning for the complete opposite. The currency markets are extremely volatile right now – to the point to where I “should” likely take my own advice and step aside.
We all know I’m not gonna do that.
We will wait and see if indeed the USD has any follow through here – or turns back down and continues on its way. In light of this I wanted to show you something interesting. Not as much the USD value vs any number of other currencies – but USD with respect to its actual “purchasing power” in real world scenarios.
I’ve “borrowed” this lovely graphic from friends at Zerohedge, and hope no one will mind:
Decline OF USD Purchasing Power
Inflation is nothing new I know, but it does go to show how “endless money printing” really affects those living within it, as opposed to just looking at USD vs another currency. Fact is, with every Central Bank on the planet doing it’s best to keep up with the devaluation of the USD its difficult to really see it day-to-day.
In not living in the U.S and getting almost unimaginable “bang for my buck” here in Mexico, I can’t say that I know what it feels like either – but imagine that a young struggling new family ( with likely one person out of work ) must be feeling the pinch.
And so the printing continues……. with likely larger QE 5 coming soon.
There could be one more blast to the 157s for the GBPUSD pair though will have to see how it continues to break down next week. Fundamentally speaking analysts are bearish on EUR and GBP vs the USD. But really who knows.
Call me a fool but – I see both EUR and GBP vs USD have “shaken the tree” and fallen to pretty solid lines of support over the past 2 blistering “USD strength” sessions.
If this was just a “dollar surge” and not the start of something new ( which I suspect it was ) entry long EUR and GBP vs USD right around here look to be “relatively low risk”.
Fundamentally I am “bearish earth” – but gotta find trades within it all!
I guess the best view is to take no view and just trade the levels. 🙂
Here a link to the article…for what its worth. bit.ly/ZRipfX
Well…..I had a quick look at the article ( which is dated April 26th ) and see that it makes note of “gaps”, and a bit on sentiment – but (at least for me) doesn’t really provide much tradeable information. As well one has to consider “what it’s trading against” – take Japans current printing – and see that GBP/JPY has absolutely skyrocketed! If in a vaccum you’d be thinking “holy shit the pound is strong!”.
trading EUR/USD as well GBP/USD is ( as Ive mentioned before ) not really my thing – as the fundamentals don’t really do much for me.
If the continued weakness to show in in the Aussie I will be taking a short position – the squeeze has fired on the weekly but could reverse as it’s weekly candle – however if this candle closes and the squeeze is neg I will take and continue to add to a short Aussie.
Cheers Schmed,
We certainly sit on the cusp here today Schmed – as both AUD and NZD “hover” at important lowes against USD.
Personally – I’d like to see the Commods pop in general if indeed USD is rollin over and “risk” remains a while longer.
I have orders “hovering” with consideration of USD making it’s next leg down.
One more quick thing on a technical level.
If we see USD ( in this broad case $dxy ) “swing high” here with today and then tomorrows action – that would mark a day 8 type high of the current daily cycle, and suggest considerable time for much further downside action. That “is” the current count with respect to cycles….so….today and tommorrow are of considerable significance. Perhaps this lines up with your “squeeze fire!” ( you should get a patent / domain on that ) – Sqeeze Fire – love it.