Dollar Woes Continue

Posted by Rob

January 4, 2008

The USD decline continued today following disappointing results in the US NFP and US unemployment figures. Analysts are expecting the Federal Reserve to make further interest rate cuts to help bolster the economy.

A Shaky Start to 2008

The USD has stumbled into 2008 after a temporary rally against the Euro towards the end of December. There are mixed feelings amongst experts, some predicting the USD to bounce back in 2008, and others foretelling further trouble ahead. Either way the currency trader can trade the USD against major currencies by either going long or short depending on the outlook and time-frame. Another alternative will be a move to tangible commodities such as Gold and Platinum, which have been performing well, and look to continue doing so.

A Look at the Chart

The EUR-USD chart shows a vertical line highlighting Euro highs breaking through last months highs. Price action is moving well above the 55-day Ma (marked in green), unlike late December where the price action moved more closely with the 55-day Ma. The beginning of January shows higher lows on the Stochastic which are matched by the retracement on the 4-hour price action.

Although it looks to late for an entry on the trade, further confirmation would lead to further Euro growth. Looking at the economic picture we have seen a strong rally in precious metals. Gold performing particularly well.This suggests further weakness in the greenback.

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