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Currency Strength

The Dollar is Weak: Here’s Why

The Dollar is weak, here’s why.

Anyone who has been checking the currency strength meter in the last week will have noticed consistent weakness in the US Dollar.

And it’s a similar story for the Japanese yen (JPY) and Swiss franc (CHF) too.

Why?

Because these are all safe haven currencies.

The market generally tends to be in 1 of 2 states:

Risk on or Risk off

Right now the market sentiment is ‘risk on’. Traders are optimistic about a more encouraging outlook in the aftermath of the Coronavirus. As a result investors are moving money out of safe havens and into riskier assets.

You are literally watching money pouring out of the USD, JPY & CHF into riskier assets such as AUD, NZD & CAD.

The opposite is true when the risk tone is ‘risk off’. In this state money flows into the safe havens (USD, JPY & CHF) and out of riskier assets (AUD, NZD & CAD).

This process repeats again and again and can change on a daily basis.

Why is this important?

If we know the overall risk tone we can drastically increase our chances of success by trading in line with the risk flows in the market A.K.A the smart money. 

Trillions of dollars flows through the market each day. To trade in the opposite direction would be crazy.

Did you find this post helpful? I am working on making Currency Quake even more useful but I can’t do that without feedback and suggestions from you.

Feel free to send me a message or post a comment in the box below.

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7 Comments

  1. I have caught GJ buys this entire week because this metre helped me zero down on which currency pairs to trade definitely as a confluence to my strategy…it majorly pointed JPY as the weakest currency at the moment and GBP was among the strongest…perfect idea it was to focus on yen pairs…i chose GJ though and ive been killing it this entire week…kudos to you guys..

  2. I am very new to the market and all the information you share is very helpful to me. thank you very much I appreciate you.

  3. Really I thanks you from deep of my heart, the effort you have given. I am new to this maeket from India and studying on this strength metre. I am thankful to you. Still I am not understanding exactly but feel it will make me easy to take a right decision of entry in market after a few days.

    Thanks

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