Bullish on U.S. Dollar Whether Good, Bad or Ugly

Posted on Posted in Currencies & Forex

The valuation of sovereign currencies tends to correlate with the underlying economic strength of a country relative to others. If there is growth and a propensity towards sensible or more sustainable fiscal policies, then the market participants will also extend favor. This is good. If not, then it is bad. At other times, it is the least ugly of the ugly that receives the most favor.

(With Europe and Japan, the only two other free market sovereign currencies with large enough liquidity to be viable alternatives, still struggling to grow their economies, one could say that the Dollar is winning by default.)

The underlying fundamentals for why the dollar is advancing is debatable but not nearly as important as the fact that simply what is “is”. Today’s chart is a combined analysis of both monthly and weekly timeframes. They each show the dollar breaking out above key resistance levels. Hillbent’s oscillator indicates an overbought weekly condition for the dollar, but given our bullish investment bias, I would use any price pullback as a buying opportunity, regardless of good, bad or ugly.

 

monthly-n-weekly-chart_usd_aug-19-2014
Click to enlarge

 

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