Babak at Trader's Narrative writes:
Recently the Daily Sentiment Index for the US dollar spiked to 98%, slightly higher than the 93% bullish level we saw back at the start of 2009. That previous peak in bullish sentiment coincided with the peak in the US dollar index as you can see from the annotated chart above.Thanks Babak for this great chart and very instructive post.
The current zeitgeist binding the three together has more to do with a stampede out of Euros and into “anything but Euros” than a fundamentally driven demand for gold as “safe money”. [...] the DSI for the Euro is a dejected 2% - which would imply that pretty much everyone who wanted to get out is out. As capital flees Euroland to the US, Japan and Switzerland it isn’t too difficult to imagine that this trade has reached or will soon reach its zenith and unwind.
The ECB is removing liquidity from the markets — which is bullish for the Euro:
(Zero Hedge) [The ECB] continues to rush to take the extra liquidity out of the market. As announced earlier on its website, the ECB will withdraw another €35 billion in liquidity in the form of a one-week variable-rate tender capped at 1%, to be conducted on June 1 at 11:30 am. This is the same as the amount of government bonds purchased by the bank in the prior week, thus undoing all temporary QE benefits in the span of 7 days. This is the third and so far largest "sterilization" tender conducted in the past three weeks: the first and second were for €16.5 and €26.5, respectively.I've bought more Euros against the USD yesterday and the CAD today. Wait&Pray.