I expect the USD to turn downward here in the coming week for a final swing – and then resume its upward direction.
As difficult as it is to understand/accept (as the USD is still the world’s reserve currency – and commodities are priced in US Dollars) when money flows out of “risk” and into “safety” – the USD generally takes top spot.
This time around should be interesting though, as this will be the first “genuine risk off behavior” we’ll have seen since the currency wars took their toll on several of the majors (obviously the Yen)- so the landscape has changed considerably. It will also be interesting to see if perhaps gold and the precious metals find their legs here as well – again… if only as a flight to safety. On a purely fundamental level it pains me dearly to consider getting long USD – but with emotions and opinions sidelined a trader needs to look at the situation at hand, and trade accordingly.
Timeline wise I had suggested mid March as a time to consider “getting safe” – and it looks like I’ll be close, as this could very well bump around up here for a week or two before any large-scale damage is done. The “blow off top” is most certainly in play here as well – as the last to the party will look at this as a pullback…. and buy.
Stay on your toes everyone – and for the most part, I would look for any and all strength in stocks / equities as a last stop chance to sell.