- Talk of the US Dollar’s demise has been pre-emptive to say the least.
- EUR and GBP rallies were snuffed out during the week and the AUD is struggling with overhead resistance.
- The USD index is positioning to break into a higher range putting further pressure on these pairs.
Macro Investor follows a broad universe of markets, which can mean a large number of trading opportunities on our radar on any given week. However, given that all the big moves at the moment are to do with global macro policies, and moreover, most equity and commodity markets remain stalled, the focus this week is on currencies.
For beginning and advanced traders, these are the ultimate macro markets and often reflect changes in sentiment and the economic outlook in a timelier manner than other asset classes. The beauty of currencies is that they are really just too big for any one player to dominate – excepting the odd central bank – and even that is not always a one-way trade.
The USD is on the other side of 85% of all trades done in the foreign exchange markets, so by definition it is the bellwether and driver of most currency trends. Certainly, things specific to the EUR, or GBP, JPY and AUD are important but in the end it is the view from traders of the outlook for the USD that is the dominant force.
Our thesis is to be long USD in the medium term, as the US Dollar Index (DXY) is in a strong uptrend from its lows of early April and has this week broken up through the downtrend line of the early June highs…
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