USD shorts: When’s a good time to panic?

I’ve got a long cable position which is well out of the money and I know of a few other traders who are sitting on long AUD/USD positions and we are all asking ourselves the same question; when should we panic?

The market is undoubtedly very bullish on the USD and I don’t think this will change any-time soon but I’m still very much of the view that the EUR and GBP crosses are likely to trade higher so big dips in cable and EUR/USD are buying opportunities. AUD/USD is a slightly different animal in my view, as many asset managers are still very long of Australian assets and therefore opens the A$ up to further downside moves. That said, I’d be surprised if the AUD/USD trades much below .9550 in the short-ish term.

My view is that USD/CHF will trade aggressively higher, EUR/USD will range trade probably between 1.25/1.30, Cable will also range although we just gotta find the parameters, and the AUD/USD will find another 10 big figure range for the next few months, probably .92/1.02 or something like that. USD/JPY should be toppy near 104 but with corporate demand so strong I’m not totally confident on that call.

  1. hopefully EUR/USD will not trade in 500 pips 1.25/1.30 as i am looking forward price to visit lower level, my target is quite aggressive 🙂 but i am agree USD/CHF above parity

  2. Hi Sean, Great site! glad you did not stop sharing your views after leaving Forexlive as your opinion is one I highly regard. What is your take on Bernanke and the FOMC minutes last night. Where do you think the strength and weakness will come from. I know its bearish for gold and bullish for USD but any other thoughts? Thanks.

  3. Thanks Jonas, great to hear from you. Despite all the noise, Bernanke has no option but to continue with plenty of QE. There is no alternative. If he pulls funding the US services industries will collapse very quickly and unemployment will shoot up. Rhetoric aside, QE is here to stay and any big big USD rallies are selling opps and any Gold dips are big buys imho. Short-term stay long USD but this trend will only last few months I’d say

  4. Very pertinent topic, Sean. I am also holding long on GBP. I believe that recent downturn in GBP is due to strength in USD rather than real hard fall in GBP. if we compare the fall of GBP against USD with other currencies against USD, the fall is quite even in all, including GBP. I will keep on building Long positions on GBP and am ready to go with fall upto 1.48. I hope that once this cyclone of USD buying will settle down a bit, the ascent of GBP will be in a straight line up. Besides, as you mentioned so many times that GBP can easily move upto 1000 pips in crosses without even loosing its bearish bias. Anyways, I am keen to watch the GDP numbers tonight 🙂

  5. Greetings, Sean! I see it sooner buy a pound in the medium term, the goal of 1.45 1.40 and possibly and from there followed a u-turn. Still keep sales and add sales growth. What do you think will give a boost to the pound, in my opinion it could be the coming of Marka Carney in the Bank of England, when he came to the Bank of Canada, then turned the canadian dollar. Good luck to you!

  6. Sean, you are more often than not a contrarian… I am cobtemplating long pound ideas, but the only reason I see at the momement that aud and nzd are in a worth shape… i wonder is simple playing of USD strrength through something like nzd/usd could be a more sesnsible play?

  7. I don’t think FED will continue QE forever. It’s just feeding the bubble, time to let the market find its own animal spirit.

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