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Technical Indicators: Is a dollar reversal imminent?

Posted May 20, 2008

Technical Indicators: Is a dollar reversal imminent? Baltimore — (TFN): On April 29, net shorts on a decline in the euro came in at 21,315— compared with net longs of 18,907 a week earlier, according to the CFTC. Currency strategists now expect the dollar reversal to reach $1.52 within the next few days.

So far, the U.S. currency has appreciated 4 percent from its record low of $1.60 per euro on April 22. Not a whole lot, compared to the epic decline of the greenback against the euro over the past four years.

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The trend reversal in the currencies market will most certainly translate into a backlash against the hoarders of commodities and energy-related assets. Confirmation of the trend, accompanied by a strengthening of U.S. stocks, will put additional external pressure on the bubble levels in the commodity markets.

This backlash could be short-lived. It could also carry on for months.

Technical Indicators: Is a dollar reversal imminent?
I peg the downside risk for gold at $820-810 per ounce over the next two weeks. And although it seems unlikely at $123 a barrel, oil may retreat toward the high $90s per barrel. Remember, these commodities are part of an interdependent speculative matrix of currencies, commodities, and equities.

If you count on gold to be your financial life saver, remember that its qualities as a floatation device are similar to those of lead.
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Posted by J. Christoph Amberger · Filed Under US Stocks and Markets 

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