Which Way for the Dollar?
The past week has seen a bounce back for the US Dollar against most of the major pairings. With improved Dollar performance against 13 of the 16 most actively traded currencies. This has led to the expectation of further USD recovery.
However, looking at the USD vs Euro this year we have seen the greenback drop 8.3 percent versus the Euro on concern that the worst housing slump in 16 years will effect other areas of the economy.
A Look at the Chart
The 1-hour hour chart shows today’s EUR-USD. Although the past few days have seen a rising USD, the chart clearly shows a rising trend in the stochastic (marked by the red support line), which would suggest some recovery for the Euro. (A USD rise is marked by a fall on the chart, due to the setup of the pairing).
The currency pair has entered a tight range giving traders an opportunity to catch a break-out either side of the support and resistance lines. Market sentiment suggests further strength for the USD, however, what is the future outlook for the currency as 2008 fast approaches?
Positive Outlook
According to analysis carried out by Bloomberg: “Many analysts forecast the dollar will rebound next year along with the U.S. economy. The dollar will strengthen to $1.30 by the end of 2008.”
Negative Outlook
The expected growth in the USD is offset by graphic warnings of a so-called “Panic of 2008” from Trends Research Institute Director Gerald Celente. Celente predicts a major impact on hedge funds, derivatives dealers, as well as large corporations announcing massive losses.
Celente correctly forecast the fall in the USD last year, led by the sub-prime mortgage crises. This paints a gloomy outlook for the US Economy in 2008. The Panic of 2008 will lead to a lower U.S. standard of living, he said.
As with all areas of economics and finance, experts often differ greatly on their predicitons and forecasts. Wheter fundamental or technical experts, 2008 will be an interesting year in the financial world that could have greater impact on the general consumer.
[top]
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
[...] 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 [...]