Weekly Bounce Levels for DXY: A Weak Dollar is not Bad
Fundamental thoughts:
Many think that a weak dollar is bad for the US economy. Just because it is falling doesn't mean that it is the end of the world; and, and appreciating currency is not always the best for an economy. In addition to this, a falling currency does not mean that the US economy has no strength. In fact, "there is no simple connection between the strength of a country's currency and the strength of its economy" because "exchange rates are affected by many forces both domestic and foreign" (Is a Strong Dollar Better than a Weak Dollar?
by Scott A. Wolla).
Everyone is affected differently, and this is the key to discovering supply and demand. For example, if you are planning a trip to Europe, then you would want your dollar to rise so that you have more buying power to buy more stuff abroad in Europe. A US exporter wants a weaker US dollar so that he can attract more buyers.
And then, it is not that simple: Other data are to be considered, such as the current account, FDI, Net long-term tic flows and tourism revenues. Its no wonder currencies are "tough to trade" when all this data is lacking in retail analysis. Speculating without a true understanding of a currency is simply gambling.
So, herein lies the question:
What price will it take to prevent people from traveling to Europe? What price will it take for US exporters to refuse supplying too many goods or importing too many products abroad?
(1) Monitoring rising and falling imports, are they rising or falling relative to one another?
(2) Are more consumers or less consumers buying abroad?
(3) Are more tourists coming in and spending away?
Technical:
We have nothing technical here than lines up with the fundamental data above, so the trader is left to only guess "potential bounce levels" of the DXY or US dollar. This is the fate of the retail forex trader, and it is dangerous if one is considering investing in a currency without true knowledge of what is truly going on.
Surely, on the chart, there are potential bounce levels, but will this change the trend? At the same time, a bounce may be all that a trader needs to make a small daily or intraday profit using momentum strategies.
Many think that a weak dollar is bad for the US economy. Just because it is falling doesn't mean that it is the end of the world; and, and appreciating currency is not always the best for an economy. In addition to this, a falling currency does not mean that the US economy has no strength. In fact, "there is no simple connection between the strength of a country's currency and the strength of its economy" because "exchange rates are affected by many forces both domestic and foreign" (Is a Strong Dollar Better than a Weak Dollar?
by Scott A. Wolla).
Everyone is affected differently, and this is the key to discovering supply and demand. For example, if you are planning a trip to Europe, then you would want your dollar to rise so that you have more buying power to buy more stuff abroad in Europe. A US exporter wants a weaker US dollar so that he can attract more buyers.
And then, it is not that simple: Other data are to be considered, such as the current account, FDI, Net long-term tic flows and tourism revenues. Its no wonder currencies are "tough to trade" when all this data is lacking in retail analysis. Speculating without a true understanding of a currency is simply gambling.
So, herein lies the question:
What price will it take to prevent people from traveling to Europe? What price will it take for US exporters to refuse supplying too many goods or importing too many products abroad?
(1) Monitoring rising and falling imports, are they rising or falling relative to one another?
(2) Are more consumers or less consumers buying abroad?
(3) Are more tourists coming in and spending away?
Technical:
We have nothing technical here than lines up with the fundamental data above, so the trader is left to only guess "potential bounce levels" of the DXY or US dollar. This is the fate of the retail forex trader, and it is dangerous if one is considering investing in a currency without true knowledge of what is truly going on.
Surely, on the chart, there are potential bounce levels, but will this change the trend? At the same time, a bounce may be all that a trader needs to make a small daily or intraday profit using momentum strategies.
Capturing the swings of the stock market & currency market. It's a dirty job and equity/currency traders must do it.
