Originally published by Chamber of Merchants
I wanted to quickly share this with you:
US Dollar on the Cusp
The US Dollar is reaching a level where it either has to shoot through to 100 or it needs to turn down and let the bear out.
(Bear means heading into a downtrend)
Gold Price
Gold at the same time is looking for direction from this point on:
Gold Weekly Chart
Merchants Insight
The US Dollar strength is a direct result of the Euro and Pound weakness. If the Euro and pound strengthen, the Dollar will backflip and Gold will get its all clear for the next leg up.
Tonight we have PMI numbers from the USA. If the PMI is poor then we can expect traders to get nervous about holding the high U.S Dollar. Draghi has his ECB speech tomorrow which may stabilise the Euro and give the US Dollar the kick off the cliff I’ve been raving about, albeit prematurely.
Remember, the U.S Dollar is not strengthening on its own merit. It is ballooning from the falling Euro and Pound. When those currencies correct, and they will, and when interest rates hikes are brought into question, then traders will start cutting their bets on the U.S Dollar.
Right now the U.S Dollar looks like a fool proof trade. That would make me nervous when everyone starts making easy money. When it turns down, it will turn down hard, which will give us that very aggressive bounce the Gold price.
My account has been up and down over the past two weeks. That doesn’t bother me.
Zipping in and out is not the Merchant way.
Gold has been bucking the trend: The Dollar is much higher now than when the Gold price was at $1242. At this dollar level gold should be around $1200… but it’s not.
I believe Dollar bull run is heading for a cliff and I believe that Big Money knows that. Just how high that cliff is, I’m not sure. It may be 100.21.
But is it sustainable? The inflation, Economic Growth (GDP) and unemployment numbers say that it is not.
The next few days are going to be very interesting indeed.