Forex Daily Outlook January 20, 2010

As we expected, the dollar continued gaining ground against the majors. As we reported yesterday, the breakout last week had no momentum and the reversal late last week signaled for further dollar strength. Will it continue? Thats the magic question. We think so. There is a lot of global uncertainty and we think the dollar will benefit from it as it did during the first crisis 2 years ago. We dont know how quickly or how long the dollar appreciation will last, but on the longer term charts, we may have seen the bottom for the buck, and from here, the technicals look good. We may still see some retracement throughout the year, however, our longer term prediction is the dollar will be strengthen and close higher at the end of 2010. We know this is still a long time from now, so take it with a grain of salt; we analyze the market on a daily level; however, technicals look good and we are now dollar bulls even though we dont like the sound of that. As you may know, weve been pretty dovish on the dollar, and there are still many variables that may change our position, but we want to point out that the technicals look good for the dollar to recover throughout 2010.

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