Where is the U.S. dollar headed as we approach the next FOMC meeting?

September 11, 2013 07:14 AM
Market Pulse for August 11

Last week the September 2013 USD Index (NYBOT:DXU13) did not move much between open and close with last week’s open at 82.120 and close at 82.167. We saw a weekly high last week at 82.780 and low at 81.935. Moving into the week of Sept. 9 my weekly BULL numbers are 82.567 and 83.096 and my weekly BEAR numbers are 81.722 and 81.406.

On the horizon, a FOMC meeting is coming, actually next week on Sept. 17 and 18. Will we see tapering? Will we see a hawkish Fed or a dovish Fed? To prepare the U.S. dollar for a hawkish Fed or even tapering, the U.S. dollar needs to drop. If you look back to June 19 on the daily chart you can see the move up in the U.S. dollar. On June 19 Ben Bernanke spoke and was hawkish stimulus and the U.S. dollar moved from 81.000 to 85.000 fairly quickly. And take a good look at the price action that preceded this hawkish stance. If this drop did not take place and Ben came out hawkish, the U.S. dollar would have climbed from between 84-85 settling close to 88. The Fed does not want the U.S. dollar at 88. Now take a look at the drop following July 10, a day Ben Bernanke came out dovish stimulus. See the U.S. dollar drop. Neat isn’t it. So if in fact tapering is coming, the Fed will try to keep the U.S. dollar from rising too far from where it is today. After all if tapering is announced just how far and fast will the dollar rise, looking back at June 19 will give you a good idea. Have a prosperous week.

On the weekly chart we see a slight bull move by Dealer Intermediary adding to net shorts no at -17,469 contracts, a slight bull move by Asset Managers adding to net longs now at 1,963 contracts, and a slight bear move by Leveraged Funds adding to net shorts now at -10.388 contracts.

If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

Proceed to Page 3 for this week's detailed fundementals...


On the daily chart we see the current trend in weak territory with ADX at 19.5 and DI + and DI- touching. MACD has dropped all divergence from above the signal line and Stochastics are correcting from overbought territory. Weak trend, the market is in a range, bottom 81.000 top 82.500.

Click to enlarge.

Have a prosperous trading week.

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