U.S. Dollar in No Man’s Land

If you’ve read Survive & Prosper for some time, you’ll know I harped on gold prices being stuck in “no man’s land” for much of 2012. It was up for a few weeks… then down for a few weeks… then up again… and down again.

All the while, energy was building… like a spring coiling tighter and tighter.

Gold broke decisively out of “no man’s land” on April 12, 2013. And Boom & Bust subscribers who followed the advice I laid out in our February 2013 issue – “If gold goes below $1,530 – get short!” – well, they should be sitting on roughly $15,000 in open profits (per futures contract).

But I’m not here today to talk about gold… now, it’s the U.S. dollar that’s stuck in “no man’s land.” Take a look…

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A popular U.S. dollar-tracking ETF, UUP, has spent most of the last year trading in a tight range between $22 and $23 a share.

Each time it hits $23, it falls back. And it’s consistently found support in the range of $21.50 to $22.

The thing is, this can’t last forever. As we bounce around this no man’s land, pent-up energy is slowly building…

I’m a dollar bull… so I expect a break to the upside.

You see, there are two competing forces at play here…

1) As the Japanese yen is pushed lower, the U.S. dollar rises. That’s helped to keep UUP above $21.50 since last October, when the yen began its precipitous drop. I’m expecting this trend of yen weakness to continue.

2) The U.S. dollar is the ultimate safe haven currency. Investors buy dollars when calamity seems due to strike.

But that’s the rub. Investors are confident right now. Headlines from the euro zone have slowed… fears of a hard landing in China have been subdued… for now.

Nevertheless, these risks are still present. And we’ll continue to tell you about them. When the day of reckoning arrives, as it inevitably will, watch for a major move higher in the dollar. Until then, find another way to pass the time… the U.S. dollar is a real snooze-fest at the moment.

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Categories: Markets

About Author

Adam O'Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.