Forex

In the discussion that ensued regarding my original post, one commentor---believing I was fundamentally dead wrong---asked, "FF please save this post in a special place. it shall be remembered some day...." so I could have a reminder of how silly I was.

Well, I remembered, and while the technical price pattern I had seen forming didn't pan out, I believe the fundamentals behind my analysis are worthy of a second look.

Risk is still the major driving force in the global market place. The decline in the USD/JPY has nothing to do with the fundamental strength of the Japanese economy and everything to do with liquidity fears in the U.S. and global economy.

Even with the Fed offering to lower interest rates and inject hundreds of billions of dollars into the market place, funds like the Carlyle Group's mortgage-bond fund have become insolvent and banks are raising capital requirements.

In other words, the U.S. economy is in a recession and is violently thrashing about, trying to find a solution. Unfortunately, inflation (partially due to rising commodity prices, spurred on by a falling USD) is continuing to push the U.S. economy under water.

No end appears to be in sight for USD woes. While there may be temporary pauses or pullbacks in the USD decline, the longer-term trend has its grip firmly around a bearish USD. Keep selling the USD.