EUR

i hesitate between tom keene or this
http://www.bing.com/videos/search?q=police+academy&docid=289141032029&mid=E3A3715FAAE0AD798A33E3A3715FAAE0AD798A33&FORM=VIRE1#

nov elections could equal democrats losing control to fiscal conservatives. catnip maybe right we may not see such a huge initial amount of qe2. market confusion could lead to usd strength in the short term

Is the Dollar in an extreme position on a weekly basis where a reversal in direction is imminent?

I cannot say instantaneously where the Dollar Index is heading at the next moment or the next hour. However, looking at the weekly chart there are few major milestones than can be noticed. At the same time, around these milestones, there are critical events that have determind the direction of the index for the next few weeks or months.

My view is that unless there is an accompanying trigger or event, the domniant trend does not reverse. It may linger on, but a major reversal occurs around a major event or extreme position in an inter-market.

Consider the weekly chart of the Dollar Index, http://stockcharts.com/charts/gallery.html?$USD

In July 2008 point 1, there is an extreme postion in Oil at 147 and peak commodity prices. In September 08 position 2, there is the Lehman bankruptcy. In position 3 around December 08, there is a huge spike in the Euro. In position 4, there is the low in global stock markets and accompanying bank stress tests in the US and Citi coming up with a profit. In position 5 / early December 2009, the US economy and the employmnt market shows improvement and accompanying decrease in asset purchase programs by the US FED along with the emerging Dubai and then Greek debt crisis. In March 2010 point 6, it becomes clear that there is no clear rescue for the Greeks and eventually at point 7 in May June 2010, a IMF and Eurozone backed Greek rescue does emerge along with stress testing for Europeon banks.

In all these milestones or inflection points, it is clear that news is moving the markets inherently people r deciding in one direction or the other. Is it herd mentality or behavioral investing? whatever one calls it the conclusion I have is that Dollar index major moves are accompanied by global events in stock, currency, commodity markets, central bank interventions or global events that cause panic.

What happens next for the Dollar? Next instance I have no idea.

However, there is this big QE intervention by the US FED. This is not even started yet. Unless there is global security event that triggers risk aversal and Dollar buying, the Dollar weaking has just started.

Market moving events are happening quite quickly in the last three years. So, its quite possible something will come up. But for the Euro to depreciate right now, there is got to be a major Euro financial crisis greek style. Short of that or a global black swan style event, the Dollar will stay where it is or continue to weaken.

Thats why I would not buy the Dollar just because it has fallen down so much in the last few weeks is not enough reason. Just looking at the chart, and assuming a technical view, the Dollar index may go to 80. But I have no idea on technicals. But there is no fundamental reason why the Dollar index will rise unless there is a major event.

A word of caution: What are the inter-market flashes at this time?

Well, the Dollar is at a fifteen year low versus the Yen, and versus the Aussie and Canadian dollar close to the peaks from July 2008. Gold has had a big run. With these unusual or extreme positions, the Euro actually should be much higher versus the Dollar than where it is now and thats why I think 1.50 is possible for the Eurodollar.

I would sit around, hold my Euro position, prepared to sell around 1.50 or higher and just wait. If there is this major global event, I will sell the Euro and buy the Vix, otherwise just wait and do nothing and thats a hard thing to do.
Why would I consider selling my Euro position? I think not to sell above 1.50 would be crazy given the crisis that just happen earlier and the austerity that is being implementated across Europe.

The next big news is the US elections and QE2 and both around Nov2. But I think this will not change much both QE2 and the resutls of the elections are obvious. The real positive news out of US and for the Dollar Index would be an improvement in monthly job numbers whenever it comes. Would it be November? Form people who I know in NY who were hired and fired recently, looks like the job market is as bad as it was a year ago.

Happy investing

China has very large gold holdings and is fact worlds largest producer (check it),it could be about to starty selling some of this to actualise profit and push up the value of the dollar which it would like to see both for trade and because of its own dollar holdings.Careful with the run away euro the union actions are starting to have effect in france and generally in europe the left can smell blood from weak government including the Uk coalition,this winter could be uncomfortably interesting as they start to test their power against cuts ,retirement etc.

USD/CNY raising that will determine USDx .
USDx will recover to above 78 EURUSD drop accordingly.
PBOC got fooled Bernanke scores.
PBOC must buy USD
bop till you drop