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Wednesday, August 12, 2009

Keeping Watch on the $USD

Like many at this juncture, I continue to keep a close watch on the $USD. It's had a strong bounce the past few sessions, but from a chart perspective it is still firmly ensconced in a descending channel. If you recall, the past several bounces also had lots of dollar bulls convinced that a major trend reversal was imminent, and perhaps this time that will turn out to be the case. But until or unless we get a couple of solid closes above first the 50-day SMA and then the downtrend line, I haven't seen any convincing evidence of a reversal yet. When and if that happens-- and perhaps Big Ben will provide a catalyst-- I'll get bullish on the dollar, at least short-term. So far, however, the recent strength isn't anything we haven't seen before during the downtrend that took hold in March, and I am neutral on near-term direction until we see how the very key overhead resistance is handled.

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