aarc

No-Brainer: Buying Yuan / Asia / EM and Selling Dollar / Euro / XLF

The US owns China now.

There is a saying borrow 1 million from the bank and the bank owns you. Borrow 100 million and you own the bank.

As for the US dollar. The Euro dollar exerts most of the pressure toward the weakness the dollar for more than 7 years that ended in mid-2008. Euro$ went up, US$ went down. Not after mid-2008 where the Euro$ dropped down like a stone. Extremely hard to recover from such a type of drop from a technical point of view. Fundamentals also not supporting a recovery in the price of Euro$/US$ in the medium to long-term.

Euro$ is now in a medium-term downtrend on the monthly chart and in a short-term corrective rally on the weekly chart . With no other currency expected to exert major pressure into the price of dollar vis-a-vis major currencies. The US$ is expected to go up in the next several months if not for several years as the Euro$ goes down.

I expect the US$ will start the next rally leg by late H2 2009 as the Euro$ goes down to an exchange ratio more likely in parity with the US$.

UUP should be able to reach close to if not greater than $30 as the Euro$ goes down to parity level with the US$.