Shredding The Dollar

I’m sure it hasn’t escaped your attention that the Dollar has been getting it on the chin lately. Just a few weeks ago I proposed that the Euro was about to break out of its recent floor pattern and accelerate higher. Unfortunately that perspective turned out to be correct and I have been watching my EUR/USD exchange rate degrade relentlessly over the past few weeks.  

But that inherently had a lot more to do with the Dollar than with a strengthening Euro per se. The chart above shows us a Dollar in a pretty classic falling pattern and I’m afraid there won’t be any stopping it until it touches about 94.5 or even 94 round.

The P&F chart is a bit less pessimistic as the current bearish price objective has its target marked at about 95.5. I hope that one turns out to be right but lacking any technical support levels below it’s quite possible that it’ll overshoot significantly.

Of course the reason for the Dollar squeeze is clear as the central bank’s QE put continues to elevate equities to effervescent price highs on a regular basis. For the record, I’m not complaining but just want to be clear we all understand what is driving the current run in equities, precious metals, and even bonds. By the way, does anyone know the Quandl key for a more high resolution perspective on Federal Reserve (and ECB) debt? Pointers would be appreciated.

Not surprisingly my setups today revolve around currencies. The EUR/USD will be a long for me assuming it drops a bit more toward 1.122, paints a spike low and then retests a little. I’d also like it to do my laundry, wash my car, and pick up the groceries. My apologies for being extra picky here but as you can tell we’ve been through a shake out period and it’s important that we maximize our chances. Which means seeing a short term low as opposed to anticipating one based on subjective measures.

GBP/USD looks like it’s probably going to just take off and don’t look back. I guess three terrorist attacks in London over the past 3 months are considered bullish nowadays. By the way did anyone catch May’s address on Sunday morning? What a crock… absolutely meaningless pandering as usual. Anyway, as I have a flexible moral disposition I’ll bite but only if we see a retest to about 1.258.

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