Jeff Clark's Market Minute

The Fed Can Make or Break the Buck Today

Once again, the U.S. dollar looks ready to make a major move.

I turned bearish on the buck last September. The daily chart of the dollar looked vulnerable to a sharp move lower. So, that made me bullish on assets that typically move opposite the buck – like gold and the Chinese yuan.

Since then, gold is up more than $100 per ounce. And the Chinese yuan (CYB) is about 4% higher.

Funny thing, though… the U.S. Dollar Index ($USD) is still trading at just about the same level it was at last September. Oh sure, the buck has been a little higher and a little bit lower. But, it really hasn’t done anything for the past four months.

That could change today. 

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The daily chart of the buck looks poised to make a big move, one way or the other, following the Federal Open Market Committee (FOMC) announcement this afternoon.

Take a look…

After running as high as 97.20 in early December, USD has endured a series of lower highs and lower lows. The dollar has also broken below the support of its 50-day moving average (MA) line – which shifts the intermediate-term trend to bearish. Now, all of the various moving averages are in a bearish configuration – the 9-day exponential moving average (EMA) is below the 20-day EMA, which is below the 50-day MA.

The last time the chart of the dollar looked like this was last September, just before the buck dropped 3% in about two weeks. That was right about the same time gold and the yuan started to rally.

Notice, though, how the dollar index hit a low of about 94.70 earlier this month and has bounced back a bit since then. That bounce brought USD all the way back up to “kiss” its 50-day moving average line from below. This is a logical resistance area and a low-risk spot for traders to put on a short position and bet that the buck is headed lower.

If resistance holds and the dollar starts to fall, then it should make a lower low – below the 94.70 level from earlier this month. On the other hand, if the buck breaks out above its 50-day MA, then the intermediate-term trend will have changed back to bullish. Traders can close their short position for a small loss.

Either way, it looks to me like this chart is ready to break in one direction or the other sometime soon – perhaps following the FOMC announcement later this afternoon. Based on the recent rally in gold and the Chinese yuan – which seems to be anticipating a lower dollar – I think the odds favor the dollar bears in this scenario.

Best regards and good trading,

Jeff Clark

P.S. Like I said above, I see some immediate action happening with the buck. But, the long-term market outlook is a different story…

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Reader Mailbag

In today’s mailbag, one subscriber shares a successful trade… 

I just wanted to report that I was able to get in on [a recent recommendation] and closed it today… The Mastermind training is definitely working in good combination with my Delta Report subscription…

I ended up with a very nice $1,000 gain in return for having some money committed to the trade for a couple of days. By way of comparison, I started my work life as an Emergency Medical Technician making $1.90 per hour and was only paid for 13 hours of each 24-hour shift. 

So, what I earned with this trade would have required 40 days of 24-hour shifts. Now, to be fair, we have had some inflation since then…

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Thanks for all you do! One more gain like that and I will have already recovered the full cost of the Mastermind series and I know it will continue to benefit me, and those who depend on me, long after the series is complete.

– Paul

How are you preparing for the coming market crash that Jeff’s been talking about? Do you have a plan in place?

And as always, send any other trading questions, suggestions, or stories to [email protected].

Jeff Clark's Market Minute Archives

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