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Sell EUR/USD

March 19, 2020 / / No Comments

About half a year ago I wrote a post FX markets about to get interesting again!. The main point I was trying to deliver is that volatility in forex space could shoot up significantly. Since then this is exactly what has happened in most currency pairs against the dollar. I believe it’s not over yet, in fact it could only be starting. We could say there was one exception, that was EUR/USD. Until now.

The same post could have been written for any almost other currency some time ago, let that be GBP, JPY, AUD, CAD,… But as a European I am for obvious reasons focusing on the EUR/USD pair.

The goal of this post is not to bore you with details. If you’d wish to discuss the topic, give me a shout. But now let’s get straight into it.

Here is a monthly chart of EUR/USD currency pair dating back to 1980s.

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FX markets about to get interesting again!

August 13, 2019 / / No Comments

I haven’t been focusing on currency markets much in the past year or so and there’s a good reason for it, volatility. Rolling 30 day standard deviation is sitting at 15 years lows, in some pairs even lower. This is very well reflected by charts where we can see multi-year consolidations or sideways trends, however you want to put it. I don’t know about you, but I like trending markets, and most currency pairs have not been trending in years.

It feels, however, times are about to change. Volatility could increase soon thus making FX markets interesting again and when volatility does increase everyone will go on about currency wars or some other thing to justify their narrative.

Let me start with showing you a volatility chart of individual pairs going back 15 years and continue with an overview of some majors.

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How will the dollar affect stocks?

June 10, 2019 / / No Comments

I guess everyone knows the saying ‘fool me once…’. The market tries to fool us not once or twice, but much more often. If it was straight forward, risk management wouldn’t be as important as it is. In fact, it’s the most important aspect of trading in my opinion. I believe finding the best opportunities and making the most money out of them starts with great risk management and not other way around.

In a recent post Dollar about to rally? I was exploring the dollar bull thesis. Frequent readers know that I’ve been a dollar bear for a long time now, and exploring the opposite side of an investment thesis is a must if you want to manage risk effectively. While the dollar is still in a sideways trend, last week turned the table in favor of dollar bears once again, which is my preferred stance. But why is this important and how could this affect the stock market and economy?

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Dollar breaking down

January 10, 2019 / / No Comments

I bet you found yourself being a bit early on the market on a few occasions. This can be very risky, because there’s a thin line between being early and being wrong. Having a sound risk management one can prevent losing (too much) money, however one must remember that there are two dimensions of a good trade, time and direction. If either of them is wrong, you risk losing money! Thus I don’t trade on my macro views until the tape confirms them.

I wrote a post Euro to repeat 2017 move? three months ago. Clearly I was early, but now it looks US dollar is finally breaking down, thus confirming euro and other currencies could appreciate versus the dollar.

Let me start with a monthly chart of Trade Weighted US Dollar Index of major currencies by FRED. The broad index looks more bullish too be fair, but it does not offer that much history, so below I will show you an equally weighted index against emerging market currencies too.

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Euro to repeat 2017 move?

September 20, 2018 / / No Comments

The US dollar is the most important currency and EURUSD is the most important currency pair in the world. When you get the dollar right then you can get most things right because everything is so interconnected and linked to it. This is also the reason why I focus so much on it.

I highly respect opinions of some friends and people I follow who think that the dollar might appreciate a lot in the coming months, but I don’t agree with them. I think that the world needs a weak dollar, stocks need it and the inflation narrative needs it too.

I’ve been saying that for some time, and you’re welcomed to read my last post about bonds and inflation as well as my last one on the dollar. 

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When even the bears get bullish

June 25, 2018 / / 1 Comment

The dollar or its index DXY rallied by around 8% in the past few months after it lost 15% since the beginning of 2017. In post ‘Macro overview’ I wrote we might get this tradable counter trend rally and it feels to me it could be a good time to flip the card again. This time in the direction of the primary trend, which is becoming bearish for the dollar again. Read More

Gotta love FTSE and DAX

December 17, 2017 / / No Comments

Let me start this post with one of the most famous and important quotes by George Soros. He believes that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong. 

I’m sure you can agree with him as we are in the market to make money, not to be right. But there are times when trading is hard, when it’s frustrating, when you just want to give up on trading. These are also times when one has to do everything to keep the hard-earned money intact and when you have to protect your emotional capital too.

But usually it’s not only you who is going through this kind of periods, it’s the whole market. And usually the biggest moves occur when everyone gives up on something. Can you see a connection here?

So why am I writing this? One of examples about giving up on something could be the stock index FTSE 100. Read More

From tech to financials and energy?

December 3, 2017 / / No Comments

One of the characteristics of a trending stock market is sector rotation. In a bull market not all sectors are necessarily trending higher and sectors are taking leadership in turns. This means that some are bound to outperform while the others are under performing. Sector rotation is a very important fuel of a bull market. So identifying sector rotation is crucial to be successful in the stock market. The phrase past performance is not an indication of future results is something that applies here very well!

We’ve seen increased volatility in the stock market this past week. I think that the reason could have been due to a rotation and not because a major top is forming just yet.  Read More

What happens if you trap some bears ahead of the winter?

November 14, 2017 / / 2 Comments

I guess they could go into a panic mode and it could get ugly! In this case I would not want to stand in their way, but I would rather use the opportunity, run behind them and press the bears even more.

As you know, I am a long-term US dollar bear, I wrote about my views many times before. Two months ago I wrote a post about an expected ST correction in the dollar (or in FX pairs against the dollar). We did get it, but in EURUSD not as deep as I have been expecting. Which is not bad if you ask me, just shows how strong EUR really is. Or if one wants to put it differently, it shows how hard it is for USD to catch a bid.  Read More

Dollar to catch a bid?

September 24, 2017 / / 3 Comments

Is the dollar about to turn just when everyone got excited with their shorts? We’ve seen an amazing selloff in the last couple of months, and while I still believe we are in the beginning of a major bear market [please see more here], I would not be surprised if we see a corrective rally from the current levels. This would also fit well into gold story discussed in the last post. Read More

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