Our thesis of a WEAKER USD is very valid and we feel it is gaining strength. Yesterday’s price action surely puts a dent on our PL, but we remain steadfast in our belief that the USD is at the onset of a major move lower. We focus on the EUR as it is the biggest component of the DXY and the biggest alternative to USD hegemony.
MONTHLY CHART: The MAJOR TREND in the pair seems to have breached a level in NOVEMBER of 2020. This move could be a back-test.
It is our view that PRICES ALWAYS LEAD FUNDAMENTALS. We generally stay away from making bigger macro calls, but this price action is strong in many time-frames, leading us to believe that we may be in the early stages of a PARADIGM SHIFT for the USD.
WEEKLY CHART: Patterns of consolidation usually end up with sharp break out moves. Last weeks move to 1.1470+ may have been a preview of what’s to come. As always, we have to find levels where the thesis is NEGATED: 1.1170-1.1150.
Big BOLD CALLS are what drive PL. We are firmly in the USD bearish camp, but we know exactly how much capital we have at risk.
We are looking for an out-sized move, something that happens infrequently in markets, so we are committing an amount of capital that,if right, will give us 20X returns, and if we are wrong, will not harm our business. Risk Reward and the management of PL is critical for plays like this one.