While many USD bulls (including myself) think that bullish momentum in the US Dollar Index has a ways to go before buying pressure is exhausted, there is a compelling argument that this is not the case. First, the United States economy officially met the criteria for a technical recession as of Thursday morning: two consecutive quarters of GDP contraction, which is bearish for USD in theory.
Second, Fed Chair Jerome Powell gave ambiguous comments at the FOMC press conference this past Wednesday, which many analysts and traders interpreted as subtly dovish. If true, this would be monumentally bearish for USD, considering US inflation remains at 40-year highs. For those interested in shorting the US Dollar, here are three major pairs that the EdgeFinder, an A1 Trading tool for supplemental analysis, signals as opportunities for selling USD.
1) Sell USD/CHF
With a rating of -6, earning a ‘strong sell’ signal, fundamentals currently favor CHF for the most part, between Switzerland’s 2% unemployment rate and growing economy. The only strike against it is currently COT data, with a higher percentage of institutional traders buying USD rather than CHF.
2) Sell USD/CAD
With a rating of -4, earning a ‘sell’ signal, fundamentals are somewhat mixed for the pair, and are especially unique considering that the US is one of Canada’s primary trading partners. However, retail sentiment, seasonality, and trend reading currently weigh in CAD’s favor.
3) Buy NZD/USD
With a rating of 4, earning a ‘buy’ signal, fundamentals currently favor NZD in light of New Zealand’s 3.2% unemployment rate and smaller economic contraction, as well as their exports. While institutional and retail sentiment don’t favor NZD, seasonality and trend reading do.
How To Monitor USD
For those who are interested in keeping tabs on USD fundamentals and sentiment before trading major pairs, investing in the EdgeFinder will help you keep up with the latest economic data, COT data, and more. Use this link if you would like to purchase the EdgeFinder, or perhaps try it out for free.
On Friday this past week, the United Kingdom’s Office for National Statistics released the latest reports on the UK’s Gross Domestic Product (GDP), a means of measuring economic output. It was revealed that their economy grew by -0.6% month-over-month, and -0.1% quarter-over-quarter, which entails a contraction for both timeframes. Although these numbers are less disastrous […]
This week the public received startling news: on Wednesday morning, month-over-month CPI (a proxy for inflation) in the United States had unexpectedly remained static, clocking in at 0% whereas a moderate 0.2% increase had been forecast. Core CPI (which excludes food and energy prices) likewise came in lower than anticipated at 0.3% month-over-month, while Thursday […]
Next Tuesday, the RBNZ will announce their new official bank rate which is expected to be 3%, a 0.50% rise from July. This hike will make it the highest yielding major currency on the market. Here is why you should consider buying the kiwi before Tuesday's decision as well as some strong NZD long setups. […]
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