By Sean Hyman | May 12, 2009
Today, I couldn’t help but notice that oil is around $59.50! The bottom was put in at around $33. So we’ve almost doubled off of the lows.
Why do I mention oil? Because oil and the euro tend to travel in the same direction (over time). This also helps to influence the dollar downward.
So in light of the U.S. dollar index breaking its uptrend line and falling below its 200 SMA…and the EUR/USD coming back up above its 200 SMA for the first time in a long time…and oil hitting “new highs”…I’d say it might be best to be a buyer of the euro vs. a short seller of it.
Therefore, look for buy signals in whatever time frame that you choose. We’re re-entering the era of a falling dollar once again. So even if you’re a short term trader, you want to keep that in the back of your mind and trade against the dollar. The best way to do this initially is through the euro (EUR/USD) since it’s where the next biggest pool of liquidity is for investors.
This is why they call it the “anti-dollar”. There’s no currency that has a higher inverse correlation to the dollar than the euro. Therefore, if you get bearish on the dollar, you’re automatically bullish on the euro.
Then once this “dollar downturn” strengthens, being long AUD/USD could be a great viable option as well based off of the superior fundamentals that they have on just about every other country right now
No comments:
Post a Comment