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USD: 3 Signs The Tide Is Turning; How To Trade

The US dollar remains strong also after the FOMC meeting minutes. The ship continues sailing.

Here are three signs and how to trade it, by the team from Credit Suisse:

Here is their view, courtesy of eFXnews:

For the past two months the USD has been stuck in correction mode. As we highlighted, lengthy consolidation periods have been fairly common in structural USD bull markets.

 We are starting to see signs that the consolidation period might soon be turning. The rationale for our view is threefold, as follows:

1) Recent comments from ECB officials significantly reduce the risk of an early “tapering” of asset purchases.

2) The stronger-than-expected tone of US housing starts data might signal the beginning of the reversal in the US data momentum that trend our economists project.

3) Lack of inflation and FX strength are biasing monetary policy developments in G10 in an increasingly dovish direction.

Trough of US IP momentum is here EURUSD shorts are attractive Credit Suisse May 2015

How to trade it?  

In an anticipation of a resumption of the upward trend in USD we favor re-entering EURUSD shorts. The recent clearing of short EURUSD positions likely established below 1.10 highlighted by the most recent CFTC data suggests there is potential for a renewed EUR downturn. A risk to our view is the overall high level of speculative EUR shorts, but elevated levels of shorts historically have not stopped currencies from weakening in a clearly defined trend, as seen in the case of JPY in the 2012-2014 period.”

Alvise Marino – Credit Suisse

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.