Quote:
|
Originally Posted by TraderPierre
Bigger picture bear, you need to look at the bigger fundamental picture. You also need to take into consideration what has already been priced in and where dollar weakness starts to become a problem for the real powers in this market, the central banks. As I mentioned in another thread, central banks will not allow a dollar freefall or for speculators to dictate the prosperity or otherwise of the world's economies. They tolerate these speculative moves but that is all, there is a limit to what they will expose their respective economies to and once that limit is reached make no mistake they will act in concert. There's talk of a line in the sand at 80 on Usd/Jpy and the ECB has intimated levels much above 160 on Eur/Usd would be uncomfortable. Once they make those levels absolutely clear then the market tends to respect them (or fear them!). I don't know if you were around for the BOJ intervention a few years ago but that was a good example, once the jawboning stopped and they had issued a shot across the bows it was every man for himself who dared to short dollar/yen!
We've had a good run but it can't last forever.
If I remember correctly you were in the 'definitely won't break 1.30' camp not so long ago weren't you  |
Traderpierre
Hahahaha, I don’t recall stating my reputation on the fact that 1.30 would not break. But it did make sense that the .618 price retracement in concert with the .618 extension in time of the 04’ dollar run would be a nice reversal point, which that area held in range for a good time. (Btw, there were other professional sources preaching the same ting) But when it broke, it broke decisively, took a retrace to the backside as support and hasn’t looked back.
I agree with your assertion that the Central banks will act in unison, but I’m not sure they will be able to stop the tide, but more try to form a cushion for a softer bounce. Make no mistake the market is theirs, but the US is in no position to make any sustained effort with it’s reserves so it will need the help of the others…. They have already tried with no effect so I doubt they will be able to form an impenetrable wall. But more of a series of statements, cash liquidity infusions, and credit manipulations to slow the rapid advance.
As for the EU, imho, it’s still fragile and for many of it’s members, a strong Euro is not what they want.
I remember the days of BOJ intervention, but this is different as the US financial markets are teetering on the verge of a major correction.