Mar 16, 2015

Trading The Parabolic U.S. Dollar | Seeking Alpha

Summary

  • The parabolic US dollar is caught up in a popular mania of universal bullishness.
  • After just enjoying its second biggest and fastest rally on record, the USDX is the most overbought it has been since 2008’s once-in-a-lifetime stock panic.
  • After all past extreme parabolic surges, the USDX has suffered major corrections that erase most of their gains. Odds are a similar reversal is imminent today.
The mighty US dollar has been red-hot in March, rocketing higher on the incredible divergence of major central-bank policies. While the Federal Reserve's first rate-hike cycle in 9 years looms, the European Central Bank has started aggressively monetizing sovereign debt for the first time ever. The resulting yield differential has catapulted the dollar parabolic, portending a major reversal and fantastic trading opportunity.
Currency trading is the biggest financial market in the world, with trillions of dollars changing hands every day. Yet since major currency price levels generally meander slowly, this massive market lurks beneath the surface with scant limelight. But this month the soaring US dollar and plummeting euro have utterly dominated mainstream financial news. These warring currencies' huge price moves have been epic....

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