Wednesday, December 2, 2015

The US Dollar.........ANOTHER PESKY FACT!

The US Dollar

The IMF confirmed on Monday the Yuan will indeed be included in the SDR basket, and this could weaken the position of the US Dollar around the world. 

One of the main reasons why the US Dollar gained a lot of strength lately wasn't because of the 'strong' economic situation in the USA, and it wasn't because the market was anticipating a rate hike. No, the US Dollar was appealing as a world reserve currency because it was worldwide seen as a safe currency but now the Yuan is being accepted by the IMF as part of its Special Drawing Rights basket central banks all over the world might be tempted to convert some US Dollars into Yuan as the Chinese currency will gain a lot more credibility and legitimacy overnight due to the decision of the IMF.

The chart of the US Dollar Index shows some signs of fatigue. After the most recent run, the Relative Strength Index has almost reached an 'overbought' status whilst the MACD is about to make a negative crossover. These two indicators could point in the direction of a weaker US Dollar in the next few weeks.

Now the Yuan will probably be added to the SDR basket, we might see some more 'weird' swings. 

Is it time for a 'Dollar crash'? We wouldn't be surprised if it is.

The US Dollar might have reached the top of its strength and could see a downward correction in the next few weeks.


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