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March 23, 2005

USD Reversal?, Wed., March 23, 2005, 2:50 PM

I am feeling the pain of a stronger USD, but hanging in without morphine. There are, however, limits. The trade-weighted USD sits at 83.38. I had expected it to fall.

If it moves above 85.44 this cycle, then I will be in trouble, and will have to put away my sword, for fear of falling on it.

The EURUS cross rate now sits at 129.72 after breaking down through it's 50-day MA at $131.18, which I didn't think would happen. Instead, I thought the rate would cross over 135 on its way to 140, causing gold to rally sharply. Ouch!

The 200-day MA, which is a major support level, is close by at 127.11. I expect it to hold. I do not expect to see a new bull phase for the USD here.

I've been known to be wrong.

It was just a week ago that I wrote that many traders would not be able to stand the emotional trading in gold that I saw rapidly approaching, and I suggested that if they saw a lot of strength in the USD, they might want to sell out their gold stock positions.

I could have taken my own advice. But, for now, I am holding tight.

Posted by Posted by Bill Cara on March 23, 2005 02:50:57 PM | Category: Forex , Gold