On Friday I sold all of my Euro and Aussie $ positions. Both ended the week in a flurry, with the Euro topping 1.44 and the Aussie $ topping 0.92.
This rally was thrilling, but ultimately made me too nervous to stay in the positions. Everyone today is bearish on the dollar – and when that happens, it’s due for a rally. It may be hard to believe, but it wouldn’t take much for it to pop.
Ultimately the trend is down, but it’s rare for something to go straight down. For example, what if Bernanke surprised everyone and held rates? Surely the dollar would pop then. I’m not saying it’s going to happen, but it’s scary right now with everyone on the same side of the trade.
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