19/3/2012

http://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2012/03/16/US_Dollar_is_Vulnerable_after_Sharp_Weekly_Reversal.html

Fundamentals

What could cause a significant US Dollar breakout and further strength? Put simply, the traditional safe haven currency will do well when “risk” does poorly; if speculative investments such as stocks and commodities turn significantly lower the US Dollar would likely continue higher. Yet if the US S&P 500 resumes its march towards fresh multi-year peaks, expect the Greenback to turn lower. Given the choice, any rational investor would look to the investment with the highest returns relative to risk. In the currency world this means seeking currencies with the highest short-term interest rates with relative safety. If traders perceive low danger of losses, they will plow into the highest yield—currently the Australian Dollar—and go against the lowest: the US Dollar.