The US dollar has been on the rise driven by higher interest rates. It’s been ignoring the bad news and thriving on the good. But the megatrend is bearish, so consider investments like the Invesco CurrencyShares Euro Currency Trust (FXE), explain Mary Anne and Pamela Aden, editors of The Aden Forecast.
Since interest rates have been surging, the dollar’s been moving right along with them. But the dollar is still below its 65-week moving average and it remains vulnerable. This means the primary tendency for the dollar is bearish and it could turn around and head lower at any time.
For the dollars you have to hold, 90-day T-Bills continue to be a good way to do so. The T-Bill rate is now higher than the inflation rate, so for the first time in a long time, you are collecting real interest over and above inflation.
For now, the dollar index will remain firm by staying above 101, too. And as long as it does, stay with it. But once the 101 support is broken on the downside, it’ll be a strong signal that the dollar is going to fall much further.
One reason why this is a tendency is primarily due to the anti-US dollar sentiment, which we discussed last month. It continues gaining momentum as more countries seek alternatives to the US dollar and keep doing their own thing as far as trade and their reserve holdings.
Meanwhile, the major foreign currencies are bottoming. One we like best and recommend buying and holding is the euro. FXE is an easy way to do so in a standard brokerage account.
Recommended Action: Buy FXE.
