Above is an almost up to date weekly chart of the USD index. It is missing the last few hours of trade from yesterday but is more then adequate for my puposes. I continue to be mildly bearish on the USD given the movement of equities and the structure of currency pairs like AUDUSD which I believe has some more upside (I will provide a post about this if time permits). I do however continue to believe that the ECB does not know what is about to hit them. The belief that Germany can avoid deflation or is better prepared to weather the impending storm is ludicrous. It reminds me of the decoupling nonsense that was touted last year. Being the worlds largest exporter and with demand being destroyed virtually everywhere, combined with a strong currency, is a recipe for disaster. Thus playing weakness in the USD index may not be a case of going long EURUSD. If a sell off in EURNOK, EURSEK, EURGBP, EURCAD materialises, on the back of a realisation that a weaker currency may be favoured, for a period, by an export orientated region, the last thing you want to be is long EURUSD. So it's not totally clearcut, hence my slight downwards bias.
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