Poor economics, poor outlooks, poor equities, poor this and poor that. There are many opinions on where things are, and maybe where they need to be, but eighteen months of U.S. bad news looks to already be baked into the economic outlook, and into dollar valuations, to the greater degree. The market seems to now be fully focused on what is coming rather than what has been, and that has dampened down the near-term volatility.
“Sentiment in the near-term has swung towards a positive dollar stance, and with the tidal wave of new dollar bills coming in to release the inter-bank’s iron grip on Usd’s the continued buying is a reflection of perceived fundamental U.S. economic values improving, especially when compared to other regions right now” TheLFB-Forex.com Trade Team members said. “Rather than looking at the headlines for economic values being right or wrong, traders are seeing it reflected in charts that have the major forex all pairs sitting at daily chart main Simple Moving Average areas”.
The charts reveal that a new U.S. Business Cycle may be underway, it may be shallow, it may be less than appealing, it may be many things, but it seems to be here. Until the charts reverse these technical set-ups that have the dollar holding each of these majors the likely story is that a weak U.S. economy will support a dollar that is increasing in value, and increasing for many reasons.
“The greenback had been pounded lower on the dollar index, but now those pairs that had been inflicting pain on the greenback passed the whip for a while whilst they go through their own contraction phase, and it looks as though the dollar is not giving it back any time soon” the trade team said.
Oil and commodity prices are stabilizing, write-downs and debt are actually being accounted for, and an 'out with the old and in with new' outlook seems to be in place. The general opinion has been that the U.S. dollar may fall further from here, for a number of bad-news related reasons; maybe, maybe not, time will tell, but the dollar does not look to be getting much weaker, whatever those opinions, and whatever the headline noise.
“Just look at the amount of noise, opinion and reasons above that can be argued on both sides, but in reality it all means very little to a forex trader; Traders need to trade the charts and not the headlines, and let it all evolve however it wants with them following the trend. At these times there really is no room for opinion; it is all about sentiment, momentum and near-term tolerance for risk”.
There would be plenty to focus on in regard to bad news, from all regions, but right now the market looks to be ignoring it, and right now the markets, for whatever reason, are buying the dollar; you can see it in the daily chart SMA’s, and until the majors break 84.00 on the dollar index traders may be well set in ignoring the mainstream headlines.
“A 90 SMA can be used on all time-frames to determine the trend, work through the daily, 4 hour, 1 hour, and 30 minute chart and look to the trend in three out of the four that have price above/below the line. Right now most are going against the gloomy headlines; take a look”.