Figured I would post some quick thoughts this morning on why I think the US Dollar is headed higher short-term, and back over the 100 level in the next few weeks:
The Pound has been under pressure as of late, breaking down to 31 year lows versus the US Dollar - a trend that is likely to continue, as details of the Brexit start to come to a head. This will only add strength to the US Dollar.
The odds of a rate hike in December are up to 64%, on stronger U.S. economic data. The US dollar ran from the 80 level to over 100 in an 8 month period starting 5 months before the last rate hike in December 2015. Would expect the likeliness of a rate hike before the end of 2016 to add strength to the US Dollar.
Bank of Japan
Abe has painted himself in the corner as of late, with the BOJ focusing on keeping Yields at zero while trying to stoke inflation to 2%. The YEN is one of few controllable's left, and I think more weakening of the YEN is imminent, which will - you guessed it - add strength to the US Dollar.
There are many other reasons why I think the US Dollar heads higher: quarter three earnings, the Presidential election, higher yields, ect...
For now, my play on a stronger dollar is weaker Gold. As gold weakens so do miners - DUST is a great vehicle for option traders to play for a sell-off in miners.
Here is the longer term chart on the US Dollar:
A move to 100 on the Dollar will likely pressure Gold under $1200.
Stay tuned for updates and happy trading!