This text is from blog famous currency strategist Joel Kruger .
PLENTY OF ROOM FOR USD STRENGTH – Ok..so a lot of nice developments last week and decent initial follow through on some of my positions. Overall, I am long US Dollars and continue to look for the buck to extend gains across the board. Technically, the US Dollar shows plenty of room for upside over the coming weeks and months, with the Dollar cyclically stretched against many currencies and poised for a legitimate longer-term recovery. Fundamentally, I see a situation where ongoing uncertainty in the Eurozone and an escalated deterioration in China, fuel additional safe-haven bids into the US Dollar over the coming months.
See daily technical analysis video by Joel :
ONLY VIABLE OPTION – Beyond this (2H 2013), I then see a healthy and sustained US economic recovery forcing a shift in Fed monetary policy, which ultimately narrows yield differentials back in favor of the buck. So yes…EUR/USD can easily drop back below 1.2000, AUD/USD can fall through 0.9000 and USD/CAD could rally towards 1.1000. Moreover, with the Franc safe-haven option off the table, and the Yen also in the process of losing its absurd safety status, the buck is really the only viable safe-haven currency option going forward.
SHORT-TERM FUNDAMENTALS MEANINGLESS – Some key levels to watch in the FX markets this week are EUR/USD 1.2800, AUD/USD 1.0150, USD/CAD 1.0000, and USD/JPY 80.00. Any US Dollar strength through these levels will only reaffirm the highly constructive Greenback outlook. Short-term fundamentals are becoming less and less relevant and economic data releases that open some intraday US Dollar selling, should be used as formidable opportunities to buy the buck on dips. While I am short EUR/USD from 1.3095 (stop has moved to cost now to eliminate risk), my biggest long USD positions are through the Canadian Dollar and Yen. There are plenty of reasons why I love long USD/CAD and long USD/JPY, but one of the key standouts is the less than painful yield differentials in these plays.
