That is possible. The thing I don't like about this dollar strength is the characteristics behind the move going back to last night (Sunday PST). The dollar decline was fast and fierce, much like a 3rd wave. This dollar strength today looks a bit choppy and in 3 waves in other pairs which is characteristic of a 4th wave. This means that dollar should make a new low in a wave 5 and possibly complete the decline and bottom finally. I'm not a full buyer of dollars quite yet. I'd really like to see a strong snap back dollar rally in a clear five waves to start to become a larger buyer of dollars. I don't see that yet.

One I'm watching intensely is the USD/JPY which has a correlation to the stock market. Not much anymore, but still a little bit. That pair falls in line with the other dollar pairs in that it appears to be in a 4th wave and will make a new low. The stock market is acting crazy, with the S&P and Nasdaq getting hammered while the Dow is strong. The stock market needs new lows to form a temporary bottom. So that goes in line with the USD/JPY making a new low as well, and I don't see the USD/JPY making a new low while the dollar goes on a huge rally across the board.

So I'm waiting.........still.

American-T

You raise a good point. Why has there not been any issues with the European banks? I do not think that Europe was immune to the global real estate bubble: the greatest bubble in history according to the Economist magazine. Spain and Ireland had a huge run. Did the banks in Europe not make bad loans and have bad balance sheets as well? What will the ECB do when faced with many banks going bad and will this be the cause of the Euro's plunge?

Todays advise states the Euro may have made a Top. In reading past reports, it seems that the interest rate of the country is very important. Is that no longer true?

The interest rate between the Euro and the US Dollar is large and probably getting even larger. Whats your take??

It all makes sense what you say. The drop does not look very impulsive - Yet. It may if this mornings lows are broken late in the day.

Here's what's making me think. Commodities crashing today "so far". Oil, silver, maybe gold by the end of the session. Softs as well.

Would this not possibly indicate a $ bottom? It's hard to imagine commodities going down while the $ goes along with it. They usually move inversely. Yes-No? Opinions?

Thank your for your comments. I trade the top four majors usually, i.e. USDJPY, USDCHF, GBPUSD and EURUSD. Seeing as that the euro is basically the opposite of the dollar, it represents a good trade on the dollar in general. So my analysis starts there and my trading starts there as well. I usually take large positions in this pair, and when I see a sweeping large dollar rally/decline coming, I will then enter smaller trades with the CHF and GBP pairs accordingly with very tight risk (stop losses). The USDJPY has been a great tool to trade in correlation to the US stock market which I swing trade in as well. That correlation is weakening now with the USDJPY and the carry trade getting liquidated, and the pair is starting to move with dollar fundamentals more.

I have two accounts, one with GFT where I trade very actively and shorter term, and another account with FXCM that I use to slowly accumulate postions in currencies I know are going to turn for a big move in the future. I keep a very small amount of my total trading capital in these brokers, no offense to these great firms, but I don't trust brokers in general holding all my money. So I can comfortably enter small short postions on the EUR/USD and DCA on it until it turns without using a stop loss. This is the only time I won't use a stop loss and I highly discourage this most of the time, and I would never never never ever do it if I had a large amount of my overall trading capital in that same account.

Best wishes on your trading.

American-T

Very good point, I like your thinking. And you can add that the GBP is falling heavily vs the dollar in comparison to its counterparts that are making new highs against the dollar. This "wackiness" is usually a good characteristic of tops/bottoms.

And I agree, a new low would complete an impulsive decline. So perhaps a dollar short position should be taken in some pairs with stop losses just above the prior wave 1s, or recent lows. If it is in a 4th wave correction, then it cannot break their previous wave 1 levels. Some of these pairs have a great risk/reward right now to short the dollar with a tight stop at the previous wave 1, or perhaps at the most recent low. I like the GBP/USD long with a stop below 1.9966. It's currently at 2.0008. I'm in this right now with a position size the same as my short EUR/USD.........which is very small.

American-T

good.. another person short EUR/USD and long GBP/USD.. I thought I was crazy for a minute wanting to do that.. most of the time USD weekness works those pairs in the same direction.

In my view (from here in the UK) is that GBP is falling because, like the US it has terrible Current Account problems. Here too the government has very little spare cash to stimulate the economy. It, therefore vis a vis yen, is a high risk long and GBPJPY selling is a key play in this move; 177 looks the first target to me and it has already declined a long way from its highs over 250; look at that chart and there is no reason to pick a bottom on that just yet!!

Guys,
I had asked this question before but didn't get a reply from anyone. I am new to forex trading but have been reading about it a lot for the past couple of months. What is going to happen if the Fed cuts rate by 50bp?, 75bp?, or 100bp? Each cut would have a different impact right? What rate cut is most likely to halt the rally and vindicate the shorts on the EUR/USD?

a 100bp cut will definitely bring us back to record high i suppose

all other rate decisions are already taken for granted... and MAYBE help the $ a bit....

i think it is not the rate decision what will bring relief for the $, i wait for ECB intervention to finally short EUR/USD

greetZ

AT I think the reason for the DJIA going up and Q going down is because the sentement of the rate cuts benifits large corps over technical retail electronics on a whole. The Q and S&P to be simple are more the peoples spending habits and the dow is corprate bottom line. If that makes any sence!LOL not to many banks and mutual fund giants on the Q. I just cant think right now im getting frazzled a bit I just made a bad trade and had to spent the last hour making up for it! I hate when that happens. wholy stuck at 1.5730! Should I go short or long that is the question? I have to go contemplate this next move. Im thinking technacly I should short but fundamentaly the tide is changing also? Hmmmm Down under is in play and the AUD is starting to loose ground a bit to the USD. EUR seems to have some issues propping up as to there econamy,Oil is some what down but picking up again, Gold is in AUD,s favour,against JPY, Asia wants a stronger USD but cant aford to rally at the moment it seems? I think a correction is due to shake things up a bit. Going short at 1.5730

All the majors are holding their stop levels (prior wave 1s) except the GBP who didn't want to play nice and stopped me out at 1.9955. The CHF, JPY and CAD all have stochastics pushing them to gain against the dollar soon. Although the GBP broke ranks, I still feel these other dollar pairs will fall to new lows soon, and now stochastics are supporting that view. I am not in a GBP trade now.

American-T

USD/JPY (currently 97.50) is poised for a new low as long as 99.74 isn't exceeded. If you go to the 15 minute time frame you can see a triangle, which is typical of a 4th wave correction. Wave E of this bearish triangle has just completed and the small rally to 97.50 might be a minute wave ii. Perhaps a good short entry level? This is a pretty aggressive trade as a dollar bottom is coming and the Fed meeting tomorrow is on the horizon.

For me, I'm already short and holding for a new low against 99.86 and will trail my stop on the breakout.

USD/CAD (.9985) and USD/CHF (.9850) appear to be turning down.

American-T

Didn't think about that aspect in the stock indices. I thought it was just because JPMorgan was on fire all day, hoisting the Dow up. But at least half the Dow as up regardless so perhaps you're right.

Tomorrow should be interesting for both currency and stock markets. I'll have my stop losses in place, a helmet on my head, and my hands duct taped to the chair to prevent emotions controlling my moves. Should be a wild ride tomorrow.

American-T

AT thats funny thats what I should do!LOL im trigger happy lateley. Well the 1.5730 did break south but is picking it up from 1.5720 now I need that duct tape right now! The ECB and some other news is slowwwly trickeling out that the EPU isnt all peaches and cream either. That would be good if they rtamped up the new over there and told the whole truth! My old broker buddy onece said if im thinking about it so is every one else. i was ofended at first because I though I was super trader but hes right I always think back to that when im in doubt. ive used the if ya think go long first then go short.LOL i was doing a little daily studing of the pair and every time it broke the top resistance line on the b band in the past there was a signifigant correction. Given the climit and the technicals they may be working nicley together for a change? Buying is thin right now. Thats not usual as of late after the close in North America. As beat up as the USD is given the recent atemps of aid and the news that the ER Union may be in for a bit of a rocky road also is an interesting combination at this level. Gota still watch those middle easterners who love the EUR right now at any price. I think were still chopping the top though a nother attemp to 1.59 may be comming but I cant see 1.60 holding at all on the daylies. I just sold at my short at 1.5717 didnt like the way it way behaving!