Last week we had nice bullish action on USDx with a drop on friday, after a miss in retail sales. But in reality the sales weren’t as bad…they just didn’t grow compared to last month, where the growth was over 10%, so the figure isn’t as bad, which the market realized, too. From the moment the sales number was released, EU bulls only managed to go up by 20 pips…and couldn’t go higher all day, which leads me to believe they are “tired” below 2150. There is a nice hanging man candle on EU and also USDx, which suggests the end of EU uptrend is near. Inflation in the US might play a part in this…the figures last week were the worst since 2008! Inflation is through the roof mainly due to the economy opening up in high speed and thus demand being way bigger than the supply, which creates pressure on prices. Unlike EU, which goes from one lockdown to another, US seems be to on the right track, but FED will need to step up to push inflation closer to 2%, which is their longterm goal. I am not expecting any surprise rate hike, but they will definitely start talking about it and mostly about tapering, which should also put pressure on stocks and help dollar to gain some value. Considering the massive stimulus and money printing in the past few months, its surprising how resilient dollar was to all this new money. To me this means that a big upmove is around the corner…I am a dollar bull for the weeks, possibly months to come. Next week will be important for EU and the 2150-80 area needs to be watched. This week I saw some big short entries at 2180…the question is if they were satisfied with the drop towards 2050-60 or not. From my experience, when big money joins the game, they are in for 300 pips or more. I might be wrong on this…but my gut tells me 1830 is still on the table. As unrealistic as it sounds to many people at the moment. 😉
