Overbought oil at $80, overbought gold at all-time highs, yearly equity market highs, Mutual Fund year-end in two weeks, earnings season underway, Treasury yields rising (a sign that the market is moving out of the safety of bonds after 12 months of hiding in the shadows of the credit crisis), calls globally for the U.S. to get behind a strong dollar policy. It adds up to one thing; a massive swing point.
"Whether the global markets hold higher and keep the dollar under pressure, or whether the greenback automatically finds buyers at huge dollar index support, comes down to this week's equity market momentum and macroeconomic responses to earnings reports and a busy economic calendar" said Jason Pilling, currency strategist at TheLFB.com.
"We will have to monitor the earnings from Apple, Boston Scientific, and Texas Instruments, because if decent earnings numbers do not equate to stocks going higher, we have our first signal that the Usd may get bought," Pilling added.
The usual suspects for Usd strength are Usd/Cad, Gbp/Usd, and then Usd/Jpy, as the three pairs likely to make the move first. Eur/Usd, Usd/Chf, and Aud/Usd may lag the pack initially as fair value is found as each regional commercial market opens for trade at the beginning of this week.
"We have each pair's full detail, expectancy, and outlook covered in the Trade Plans, and will be sending signals as things unfold, expecting this to be a very strong week of Usd movement, one way or the other. It is a huge swing point, technically, fundamentally, and in regard to fair value across the global market," said Pilling.