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Posted By Barry Ritholtz On June 14, 2007 @ 10:55 am In Currency,Markets,Psychology | Comments Disabled
Earlier this morning , we discussed the concept of oversold , specifically looking at bonds. Let’s now review the same concept, as applied to currency — specifically, the U.S. greenback, via this chart from Mike Panzner .
With sentiment towards the dollar almost universally bearish, is it any wonder that the market appears to be setting up for a major rally in the greenback? Some fundamental factors that might be behind the move:
– the prospect that U.S. interest rates are poised to rise (further), rather than decrease as some had been expecting up until only recently
– "safe haven" buying of the greenback on the view that market conditions (e.g., volatility) and geopolitical developments are becoming increasingly unsettled
– profit-taking by U.S. investors in foreign securities, who’ve garnered substantial gains in recent months, with the procedes being repatriated to the U.S.
– indications sizeable short positions in the U.S. dollar
– chart-related buying
What does this mean? Well, let’s have a look at a chart:
Nice work Mike — thanks!
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2007/06/dollar-breakout/
URLs in this post:
 this morning: http://bigpicture.typepad.com/comments/2007/06/oversold.html
 Mike Panzner: http://www.amazon.com/exec/obidos/ASIN/141959608X/thebigpictu09-20
 Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/2007/06/14/dollarbreakout.jpg
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