Whenever I move through the currency pairs looking for trading opportunities, there are often times like this where trading seems directionless. I could make a case to buy or sell most of the currency pairs and to me, that means to step aside and wait for a clearer direction.
This is a good time to call up a chart of the USD/INX. This is the symbol for the USD Index and represents the perceived value of the USD against a basket of currencies rather than just one currency we see in our currency pairs. This can give me an idea of what traders think of the USD in the world which also means that I can get a good idea if the USD pairs we trade have underlying strength or weakness. This daily chart of the USD/INX below includes a 200-day Simple Moving Average which is helpful in determining the direction of the trend. One can clearly see that this trend is up and well above the 200 SMA. We can also see where this market has pulled back off of the highs and is now starting to move back up. This tells me that the strength of the USD may eventually work it's way back into the USD pairs that we trade. That means we should look for the EUR/USD, GBP/USD, AUD/USD, and the NZD/USD to move down and we should look for the USD/JPY, USD/CHF, and the USD/CAD to move up. This chart does not tell us when, but it does mean adopting a bullish USD opinion and being ready to take advantage of it is the play. Confirmation is key, but there is nothing wrong with looking for an edge.
