EUR USD Forecast
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EURUSD Forecast
Although my long term dollar forecast is very bearish I have just begin exiting my short eurusd positions for the near term. For as long as the Fed continues to print easy money the current rally will continue with equities and commodities (gold) rising and the USD continuing to be devalued.
The Federal Reserve will eventually begin to pull in liquidity while at the same time begin raising interest rates from these artificially low levels to fight inflation. Depending on how well that high wire balancing act while driving at 60 miles per hours goes will so also the value of the us dollar.
I would not bet against the dollar for too long. The US Dollar has proven itself to be a safe heaven in times of crisis and if you believe there actually has been no recovery and the fundamentals of the economy are increasingly worsening than you have to be bullish the US dollar.
USD Forecast
In order to abandon the dollar there would need to be an alternative choice for foreign investment and there simply put is not. The stability of the US politically and socially, in spite of its enormous deficit, still leave the US the world’s most stable and reliable economy. Although Europe is stable politically, its slow growth make it an inadequate substitute for foreign investors. And even though China’s rapid growth is inviting, the threat of political instability deters any long-term bets on its economy which in itself is still very young and needs time to mature.
In the interest of full disclosure I am bearish the USD for the long term, however now I am closing my short USD positions and have just begun buying the USD into this weakness. Once the eur usd is once again trading with strength my forecast will become sell the USD and buy the EUR.
How to Profit from the Falling Dollar
