Tuesday, July 26, 2011

EUR/USD and DXY

It has been a while since we discussed Euro vs Dollar. But these are wacky times when the ugly competition between the two is messing up the technical picture. Yet I think a trade is setting up to go short Euro again. We now have a well-defined rising wedge on EUR/USD. You know what I am going to say next: it is a bearish chart formation. For this matter I also like the dollar index higher, once EUR/USD breaks down. DXY may be a lagging vehicle due to strength in other components against the dollar continuing. This said, if equities will become weak in August dollar index will benefit, and the usual risk aversion it associates with may give it extra boost. All of this is preparation for the trade, and thoughts only, as the bearish picture in DXY is continuing. Stay tuned for my updates on this possible development.

No comments:

Post a Comment