We at FxWirePro have been short on the dollar for quite some time now and in terms of profits, it has been a very successful one.
- In early 2017, we forecasted that the dollar index like to decline from the then current rate of 100.2 to 95 area, http://www.econotimes.com/FxWirePro-Dollar-likely-to-decline-by-more-than-5-percent-630175
The reasons were simple enough,
- “The dollar faced siege from two fronts; one being the uncertainties surrounding US policies which include not only the uncertainties with regard to policies under the new administration but also the ability of the new administration to pass its agendas successfully through the House of Representatives and the Senate.”
- “The second one is more global in nature and we at FxWirePro have been discussing this over the past year or so. While the US Federal Reserve has turned out to be quite hawkish in 2017, it is well behind the curve when compared to its 2014 forecast that triggered the impressive 2014 summer dollar rally. Despite falling behind Fed’s own forecast, the dollar could find support from the dovish actions of other central banks namely the European Central Bank (ECB) and the bank of Japan (BoJ). Now, those central banks are considering a reversal in their monetary policies, which is not likely to bear well for the dollar.”
While the Trump administration has been pretty successful in passing agendas, the second factor weighed on the dollar more.
- In May 2017, we extended the target from 95 to 93, http://www.econotimes.com/FxWirePro-Call-Review-Dollar-index-target-extended-from-95-to-93-723907 and later from 93 to 91.5, http://www.econotimes.com/FxWirePro-Call-Review-Dollar-index-reaches-target-at-95-next-target-extended-from-93-to-915-814928
- In September, we extended the target further to 90.3; as the index reached as low as 91.6 that week, we also recommended partial profit booking in the tune of 45-55 percent of the open positions.
- The index didn’t reach the extended target in that run. While we didn’t scrap our extended target, we warned our readers https://www.econotimes.com/FxWirePro-Dollar-index-likely-to-test-sellers-around-95-area-942062 that the dollar might retrace to 95 area.
- The index did reach our anticipated 95 area and selloff resumed and this time reached another extended target of 89.7 and beyond.
In a follow-up piece, https://www.econotimes.com/FxWirePro-Call-Review-Maintain-short-positions-in-Dollar-index-targeting-another-10-11-percent-decline-1152931 we suggested that the selloff in the dollar that began back in 2017 is far from over and forecasted a potential decline of another 10 to 11 percent. We urged our readers to maintain short positions in the dollar.
Since the call, the dollar index has continued its sideways trade and our latest calculations suggest that in the short-term it remains trapped in Bull/Bear fight. Bulls are eying a correction of 3-3.5 percent, while Bears are looking to push the index by another 2 percent.
