U.S. dollar futures reached a multi-year high at 103.96 early this week before a linear landslide down to the 99 level on Friday, then bouncing 88 points off the low. The greenback is on pace for its worst weekly decline since 2009. More practically, unprecedented global circumstances have led to extreme levels that have now given way to more reasonable numbers. Foreign currency futures have not been immune to severe volatility as well. To effectively trade these markets, an investor must keep tabs on central bank policy. The worldwide rate-cutting and quantitative easing theme is now in full-force. Loosening monetary policy works to weaken the domestic currency, so the currency that will become relatively stronger will likely be that of the country that does the least amount of economic stimulus. Given the “unlimited QE” coming from the Fed, the dollar is likely to succeed in the game of currency debasement. In other words, a weaker dollar is on the longer-term radar, even if the USD wants to retest its recent high due to safe-haven inflows if panic-selling grips the markets again.

USD Jun ’20 Daily Chart

Ian Bannon

Ian’s interest in trading began with the stock market after graduating from Purdue University with a degree in Economics and a focus in international business. A natural strength for numbers, trends, and pattern recognition, in conjunction with a curiosity to understand the big picture has enabled a desire to understand market behavior. Ian managed his own stock account before moving into the futures arena because of the wide scope of trade-able sectors and the ample amount of fundamental support behind these larger-scope markets.