As with all Forex predictions, the only way to be sure you’re forecasting in the right way is to wait for awhile and see what happens (-:
But as we can’t wait that long, we might as well do our best and try to make some money in the process.
It’s no secret that the dollar is experiencing a surge in the past week. In fact, it rose by just over 5% against 6 major currencies and by over 4% vs. the Euro.
Will the dollar continue to rise?
The troubles which beset the US economy haven’t disappeared though the shock seems to have worn off. However, the housing slump and the vast losses of the financial sector mean that more storm clouds are gathering over the horizon and that the American economy is still vulnerable. Many experts believe that the current state of the economy will not allow the Fed to raise interest rates and make the dollar more desireable.
Also, I’m not so sure that it’s in America’s interest to see a strong dollar in the coming weeks (more on that in a post I plan for tomorrow).
Therefore, betting on further gains for the dollars may be a bit risky, though the market may surprise us all.
However, yesterday I wrote about the Russian-Georgian war and the adverse effect it may have on oil prices. If this will continue, it’s unlikely that the dollar won’t suffer. As Russia seems intent on hitting Georgia some more, things don’t look good for oil prices.
So will the dollar continue to rise? In the short term, I believe it may suffer if oil prices rise. In the long term, we need to see what happens to the financial district in the US. If more banks threaten to fall, the Dollar will likely fall right with them.
