Well, all I can say is better late than never! As I mentioned last week we are seeing dollar strength on the back of the G7 meeting. This was not a difficult call to make as there was almost a universal chorus screaming that the dollar would go down. The only sure thing I know of in trading is that when the crowd agrees on something you can bet that they are ALWAYS wrong. With every talking head on the Financial channels saying that the dollar would go down, it was easy to take the other side with comfort. Nothing is more comfortable to me than going against the crowd. This week we expect to see follow through on this dollar bounce in all major pairs except the yen.

Europe
Euro, Pound, Swiss Franc

EUR/USD:

The euro spent last week blowing out the stops of short traders. We continue to favor the short side of this pair and this week we are targeting a move below 1.40.

GBP/USD:

The Cable will also spend this week pulling back against the dollar. We are expecting this pair to trade below 202 this week. We will look to buy this dip either later this week or next. Once this pullback turns back around, look for the Cable to outpace the euro to the upside. But be patient as this dollar strength could last longer than just this week.

USD/CHF:

This pair had a very obvious spike down earlier today that was designed to stop out all but the strongest of longs. Do not be fooled by this; in fact, read it as a clear sign that this pair is going up! We are targeting a move back up to the 1.20 handle.

Asia
Yen, Australian Dollar
USD/JPY:

Last week we mentioned selling this pair over 118. The market in fact rallied up to 117.95 and has fallen ever since! We could see a small bounce in this pair this week, and if we do, we'll use it to get short. This pair will be below 112 before the end of the month.

AUD/USD:

Our nose told us that this pair was toppy last week and you know what they say about following your nose! We see this pair falling back to at least .8500 in the near term. Remember this move in the dollar is a short-term counter-trend move, not a macro change, so do not lose sight of the bigger picture. The big picture, by the way, is simply that the US is broke and the dollar is going the way of the D-Mark in the long run. Get your wheel barrows ready as the dollar will make great wall paper in the years ahead.

North America
Canadian
USD/CAD:

I have been calling for this pair to rally for the last few weeks, and waiting for this turn has been trying my patience; but we are seeing that patience begin to pay off. This pair will stage a significant bounce as both Gold and Oil pull back this week. We continue to target a move back above par and ultimately a move above 1.02.

Derek Frey is Head Trader at Odom & Frey Futures & Options.

Risk Disclaimer
Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures and options.