Position: Long the U.S. Dollar (UUP); Short the Euro (FXE)
This morning, we received several outstanding questions regarding our FX strategy; all are posted below with answers:
Q: Recently, you have been calling for a +3% move in the U.S. dollar; has that target changed, given the +2.6% move we’ve seen off the lows?
A: Thanks – all TRENDs start as TRADEs… and your question is really THE question to be asking here. I’ll answer quantitatively:
- TRADE line (what was resist is now support) = 76.89
- If the TRADE line holds, mean reversion upside to the TREND line = 80.39
- That’s +3.8% of what I’d call probable upside from yesterday’s close over the next three months
Q: You went long the U.S. dollar last week using global tightening and the G20 as catalysts. What (if any) are the bullish factors from a quantitative standpoint?
A: US Treasury yields all confirming bullish USD TRADE here – I didn’t have that last week. Can Bernanke pin 2-yr back below 0.37% is the question?
Q: Also, what are your views on the yen, the euro, and the British pound?
- Bullish USD vs Euro
- Bullish USD vs. Yen
- Bearish Euro vs. Pound
Keith R. McCullough
Chief Executive Officer