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08/17/2008 - The USD surge is for real

Posted by FOREX.com's Weekly Strategy in August 15th 2008  
* The USD surge is for real
* The great global growth slowdown is just getting started
* Don't bet against the US consumer
* Key data and events to watch next week

Last week's USD break higher has been confirmed by further gains this past week, while pullbacks have been exceptionally minimal. The speed and size of the move caught many in the market off guard, and while many analysts have already started with the 'too far, too fast' routine, I would argue further direct USD gains are in store. Precisely because the USD rebound was so fast and large, many asset managers missed the move and have been anxiously waiting for some pullback on which to buy USD. That the pullbacks of the last two weeks have been so minimal and so short-lived (rarely more than 4 hours) is evidence that institutional investors and asset managers are being forced to go to market and buy USD on strength/sell EUR on weakness. Normally, that dynamic tends to create more instability-- new positions are opened at disadvantageous price levels and are ripe to get whipsawed.  Full text »

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Filed under: Weekly Strategy