Wednesday, December 5, 2007

Dollar rally Market rally

The market has been matching the dollar rally day for day. Tell me the market wasn't worried about a dollar collapse. I think the jobs report comes out strong and the Fed tries to get away with a 25 basis point cut or maybe even no cut. I'm wondering how the market would react to either one of those scenarios. If the ECU raises or stands pat tomorrow the dollar could start to weaken again. Either way the dollar needs to test the lows before a meaningful rally. If the Fed cuts 50 I suspect the dollar decline continues. Also note the RSI is approaching overbought. The pattern so far on rallies has been to touch the 70 level and then swoon back down to new lows.