Is The U.S. Dollar About To Reverse Course?

For the first time in several years the U.S. dollar has managed to gain value against the world's other major currencies. During the first three months of 2005, the U.S. dollar is up approximately five percent against both the yen and the euro. The gains for the dollar should be considered significant when considering the United States still faces a growing trade imbalance. So far this year, currency traders have shifted their focus from the United States' large trade and current account shortfalls toward the higher rates of returns being offered on U.S. debt. The recent strength shown in the dollar has somewhat shifted sentiment within the financial markets about the future direction of the currency. A Bloomberg survey released earlier this week shows that the major currency traders expect to see dollar weakness resume later in the year, but the sentiment among dollar bears is much weaker than it was at the start of the year.

The strength shown in the U.S. currency thus far in 2005 should prove to be short-lived. The strong Gross Domestic Product (GDP) growth during the past eighteen months will begin to show signs of moving closer to more normal levels over the next couple months. The signs of a slower economic growth will likely cause a shift in sentiment among currency traders toward the more fundamental problems facing the U.S. economy. The United States trade and current account deficits show no signs of retreating anytime soon. In fact, we expect the coming trade figures to show further deterioration in the balance of trade over the next few months. The major industrialized nations outside of the United States continue to experience anemic economic growth. This continues to place further pressure on the U.S. dollar as the United States consumer continues to buy goods produced in Europe, Japan, and China.

While we expect the dollar to resume its gradual fall against most major currencies, the major wildcard in our forecast is of course China. Recent information coming from China's top decision makers indicates the Chinese are in no hurry to adjust the current value of the Yuan-Dollar relationship. Should any talks of a possible revaluation emerge later in the year, the downward pressure on the U.S. dollar would quicken as currency traders would buy the Japanese yen, and other freely traded Asian currencies, that would likely benefit from a revaluation.

Mike Fitzpatrick writes for http://www.financial-watch.com

In The News:


pen paper and inkwell


cat break through


Facts of Day Trading

Are you thinking of entering the fast-paced world of day... Read More

6 Critical Factors For Successful Trading

Success in any profession can be broken down into a... Read More

Intrenet Marketing VS Forex Currency Trading

Have you noticed that when someone's trying to sell you... Read More

Where is the Market Going?

If you ask me whether the market will have moved... Read More

Stopping Yourself

I read on a bulletin board a traders comment that... Read More

Forex Trading - Advantages and Disadvantages

What is Forex Trading?Forex, or Foreign Exchange, is the simultaneous... Read More

FOREX Trading Philosophy

Keen on starting FOREX trading? Why would you not be?... Read More

Adaptation to the Realities of the Market

Do you think adaptation to the realities of the market... Read More

Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.

You know the old joke:"How do you make a million... Read More

Why Forex Traders Plan To Fail Before They Even Place Their First Trade & How You Can Know It & ...

Have you heard the wise saying that a trader who... Read More

An Evaluation of the Devaluation

A Minister of Finance is morally right to lie about... Read More

Momentum Trading: A Practical Day Trading Strategy to Get Profits from Hot Stocks

Momentum day trading can be extremely profitable when done correctly...Day... Read More

Discovering Turnaround Candidates

There are many types of investment methodology out there. All... Read More

Forex Trading Can Be Like Day-trading

Forex trading, or foreign currency trading, has become a bit... Read More

E-currency Exchange Trading

If you are reading this article you are probably one... Read More

Ways to Acquire Discipline in Trading

One way to acquire discipline in trading..."Hey Joe! When you... Read More

Forex Brokers - Helping to Maximize Your Success

A Forex broker is a broker dealing in foreign exchange,... Read More

Money Management, Part 1

There are some common mistakes I've seen traders make in... Read More

How to Trade Currency

We all know when you go on a trip to... Read More

Options Trading - Advantages and Disadvantages

What is Options Trading?An option is simply granting someone the... Read More

Day Trading - Moving Averages vs Support and Resistance

When day trading the SP and Nasdaq futures, do you... Read More

What are Your Options Regarding Forex Options Brokers?

Forex option brokers can generally be divided into two separate... Read More

Sending Signals for Trading in Forex

Forex signals are sent by a forex firm to their... Read More

Factors Influencing a Currency Pair Exchange Rate

IntroductionThe exchange rate refers to the value of the US... Read More

Forex Broker

A broker is any person or firm that charges a... Read More

Online Forex

Q1: When you consider that the foreign exchange market has... Read More

Forex Trading Systems

The foreign exchange currency market is the largest market in... Read More

Forex Options Market Overview

The forex options market started as an over-the-counter (OTC) financial... Read More

Choosing A Forex Broker

With currency trading becoming ever more popular, the number of... Read More

Where to Get Forex Training

For those of you who are interested in forex trading,... Read More

Forex Signal Services

What are Forex signals? Forex signals are paid services offered... Read More

Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information

Profitable day traders recognize that momentum trading is among the... Read More

Forex Signal, Forex Signals Advice

There are lot's of Forex signals providers out there. New... Read More