Forex Investment and Currency Trading

U.S. T-Bond in EUR terms

• Since July last year this has been one of the best games in town.
• Owning the long end of the U.S. Bond market while also owning USD (Against EUR in this instance) provided about a 47% return into December 2008
• Now this chart looks set to break down as it moves below the 55 day moving average and tests trend line support
• The 200 day moving average stands over 13% lower

Here is the same chart leading in to the peak in January 1994

Here are the 2 moves compared

Here is the USD-index leading in to the peak in Feb 1994

Here is the comparison of price action on EURUSD just before yields started to surge in 1994

Here is an overlay of the 3 sets of price action (Bond in EUR terms 1994,DXY 1994 and Bond in EUR terms today)

• As fixed income went into a bear market in early 1994 the USD got crushed
• Continue to believe that significant USD weakness is imminent as holders of USD and Fixed income get hit.