Future Moves In USD – The Case For Higher

I can’t stand The U.S Dollar.

You know that…..everyone knows that. The actions of The U.S Federal Reserve with it’s complete and total disrespect for the currency and continued abuse of it’s position as the “world’s reserve currency” is enough to make anyone sick.

So when would we start looking for USD to move higher? Why would we even “consider there a chance” for this beaten down piece of junk to go anywhere but down the toilet?

Hmmmm………

What many fail to understand is that “the value of a given” currency can only be deemed in “comparison” to another currency…or another asset. The pieces of paper themselves carry no intrinsic value what so ever.

Consideration of “dollar strength or weakness” as compared to a single thing ( like The Euro for example ) is ridiculous as….it is exactly that – a “comparison” of only two given currencies.

So……..

How’s the U.S Dollar stacking up against The Canadian Dollar?

USD_CAD_June_28

Looks like a fantastic buy opportuntiy as USD has merely “pulled back” vs Cad.

 

USD_CHF_June_28

USD vs CHF looks like a pretty classic reversal over the past few months, making a higher high, breaking the series of lower lows and lower highs. A swing low “somewhere in here” would mark a fantastic entry point long.

What about Crude Oil?

Crude_Oil_June_28

Pretty straight forward. When the price of something “goes down” in can equally be argued that the “value of the money” you are using to purchase such products has “gone up”.

What many just can’t wrap their heads around ( one dumb fellow in particular ) is that “there is no blanket statement” in considering being “long or short” USD as it only depends “against what”?

Another chart “sniffing out” coming USD strength:

CNBC_Josh_Brown_Market_Call

CNBC_Josh_Brown_Market_Call

A good indication of a stonger dollar can be seen when Emerging Markets start to fall.

Imagine all that “free paper money” printed by The Fed and in turn “invested abroad” as to actually get some return ( you don’t actually think the banks invest the money they get from The Fed in “America” do you? – Please.) piling back into U.S bank accounts / converted back to U.S with concern for a possible rise in interest rates.

An absolute “sunami” of USD floods out of Emerging Markets and back into the United States, on even the smallest “hint” that interest rates may rise.

But……Interest rates ARE rising! In fact….( how soon you forget ) that interest rates on the 10 year U.S Treasury have DOUBLED in the past year and a half!

10_Year_Bond__Yield_Forex_Kong_June_22

 

Rising interest rates cramp corporate borrowing and in turn kill bottom lines. A rise in rates pushes USD up, as well equities down.

Rates have already reversed, adding more fuel to the fire if considering a stronger dollar.

The short term squiggles are more or less meaningless at this point as…..The Fed and Central Banks abroad are just doing what they can to grind this thing a little longer before shit hit’s the fan.

How much longer can they keep this propped up? Not much longer if you ask me.

 

10 Responses

  1. Gary June 29, 2014 / 9:12 pm

    I still think you are too early. It looks to me like the intermediate dollar rally is already rolling over. If that’s the case then the dollar is starting the final move down into it’s three year cycle low. At that bottom is where one would want to buy the dollar hand over fist. It will look like the world is coming to an end for the almighty buck just like it did in 2008 and again in 2011. That’s what happens at three year cycle lows. Everyone becomes convinced the currency is going to 0. That’s the point where the market runs out of sellers. I didn’t see any evidence of that kind of sentiment at the May bottom so I really doubt that was the three year cycle low.

    I think we saw something similar happen in the yen at the beginning of the year. Everyone became convinced Abe was going to destroy the yen and that’s the point where the last seller sold and it put in a major bottom that’s not likely to get breached for many months if not a couple of years.

    A little patience for another week is called for. If the dollar continues to drop for another 7-10 days then we will have confirmation that June 6 marked a daily cycle low and that this is a new cycle that has already rolled over into a left translated and failed pattern. That would confirm that the final move down into the 3 year cycle low is now in progress with a final bottom due in September or early October.

    The Fed has been tapering since December but the dollar still can’t get any traction. Now the ECB is actively trying to push the euro down and still the dollar refuses to rally. This is screaming that something is seriously wrong with the dollar that it can’t make any headway or even get back above the 200 day moving average with everything in it’s favor.

    • Forex Kong June 30, 2014 / 12:21 am

      I’m always early……thats why I make money.

      You can’t chase this shit….all the while – looking “backwards” at “what was”. I don’t know how anyone “these days” can rely / depend / trade off much they see in the rear view mirror. There are so many factors influencing USD “today” you need to trade it – today.

      I think you’ve missed the point.

      I can “get long” USD /CAD for example and still see USD TANK…..as long as CAD falls MORE. There is no “blanket long USD” when you’ve got TWO currencies in play.

      USD can drop like a rock…..as AUD drops like a HEAVIER ROCK ( not possible in reality but you get it ) – It doesn’t equate to being “long the Dollar”……it’s the understanding of two curerncies falling – but “which is falling harder”.

      To consider the EURO and it’s relationship to USD is pointless and juvenile as……they are the two most widely held currencies on the planet, and will “always” flip / flop for a completely different set of fundamental reasons as lets say……NZD or AUD. Imagine two currencies that can “endlessly shift” a full 10 to 12 cents with little or no real world impact. Who cares. Who trades it? Me ? – Rarely.

      The Fed isn’t tapering in the slightest….in fact….via “other means” QE hasn’t budged / if not has been “upped” as of late. Listening to the main stream media / “believing it” gets you nowhere as you’re just trading along side the rest of the sheep.

      Debate of a “single daily cycle” or “wave count” again…..completely futil as…..I’ve seen Elliot guys counting wave after wave after wave for the past 2 years still “wondering” if the count is correct. Not tradeable.

      “If this” / “maybe that” / has no place in these markets.

  2. Gary June 30, 2014 / 5:06 am

    I agree on EW. It’s nonsense in my opinion and only usable in hindsight.

    Other than a few Asian currencies & the yen (although I think this cross is about to break down also) where the cross is trading sideways the dollar is trading down against the euro, Swiss franc, Canadian dollar, British pound, aussie dollar and the New Zealand dollar. I don’t think any of those trends will change for any of those crosses until the dollar forms it’s final three year cycle low later this fall. At that point the trend should reverse in all of these crosses.

  3. Anonymous June 30, 2014 / 6:26 am

    Kong,

    I would love to join the paid version of your site but Paypal is the only payment option I can see and I am life banned from Paypal. Can you please work on opening up a new payment method? Thanks

    TheTrueHeir

    • Forex Kong June 30, 2014 / 6:53 am

      How the hell does one get “banned” from Paypal for life??

      Wow…yes – hang in there or if you want to arrange Western Union type thing, we can do that too.

      I’ll shoot you an email at the email address I see here.

  4. Gary June 30, 2014 / 4:28 pm

    The higher high in the euro almost certainly confirms that an intermediate bottom has formed. That implies an intermediate top int the dollar. Get out of those dollar longs immediately. The time to go long the dollar will be in Sept. or Oct.

    • Forex Kong June 30, 2014 / 6:36 pm

      You know…..I’ll do this ( just this once ) as it will also provide valued readers with additional learning / info.

      You still just don’t get it. Go pull up your charts, and I’ll walk you thru this – this one time.

      “If” today I was “long USD” vs EUR, GBP or CHF then it would not have been the greatest day there would it have?

      BUT I’m NOT! My members aren’t! (The real time trading has us looking for a possible “swing low” in here – before “even considering” these trades.

      Now….If I where “long USD” vs oh….AUD today…IT’s IN THE SAME RANGE IT’S BEEN FOR 4 MONTHS RUNNING! REGARDLESS OF USD STRENGTH / WEAKNESS as “you see it” ( thru a tiny microscope / pin hole ie….comparison to soley The Euro).

      USD is even 30 pips LOWER than NZD on the day!

      Point being…..all currencies and their relationship to “The Dollar” trade very differently and completely independent of each other.

      You see $DXY down a whoppin -24 today and think the sky has fallen, when in reality only a few currencies “even budged a few 100ths of a cent!

      Go back and read this entire post again ( I even outlined the “likely spike in EUR/USD !) and try “once again” to get your head wrapped around this. Open your eyes a little wider man!

    • Forex Kong June 30, 2014 / 6:42 pm

      I can’t help it…I gotta say / ask…….

      You think a 3/100th’s of a cent move ( EUR /USD up 30 pips on the day ) on a sleepy low volume Monday morning, “confirms an intermediate bottom”??

      Read that back and ask yourself – how absolutely “ridiculous” that sounds….seriously….

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