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Forex Strategies for USD Holders

With the threat of a recession in the United States, forex traders holding on to the U.S. Dollar are unsure of what to do at this point. While the drastic rate cuts by the Federal Reserve helped the markets recover a little, the overall picture for the year for the U.S. economy, and the Dollar is still bleak.

However, despite the uncertainties, there are still forex strategies that the trader can avail of. The first is to simply keep your eye on the news, which is something your forex brokerage firm can help you with. This will help you plan ahead for anything that might happen in the markets.

As the Fed cut rates, it is widely expected that they will again do so until the U.S. economy shows signs of recovering. As the interest rates are lowered, the greenback loses its attractiveness to investors. For this reason, a lot of traders have opted for selling out the Dollar or shifting their portfolios elsewhere.

That is the ideal forex strategy for the short term, definitely. However, when it comes to medium and long term outlooks for the U.S. economy, things are still unclear. With the continuing increase in oil and energy prices, inflation is not far behind. If inflation rises to a critical level, then consumer spending will cut back, and it is unlikely the Fed will make further cuts.

Of course, this will mean that the Dollar in the forex will either regain lost ground or stay at an even keel for a while at least.

Another forex strategy that a trader can use is to diversify. With the stock market at very low levels, now is as good a time to buy as any, as many of these shares are oversold. Another viable option is to swap currencies. There are those of the opinion that the fall of the U.S. Dollar goes beyond the economy, and that eventually it will be replaced by other currencies.

With the continued rise of the Chinese Yuan, a lot of forex traders and businessmen believe that it is the right time to shift properties. Another area worth looking into are precious metals, what with gold nearing the $900 level and beyond.

While these forex strategies may seem contradictory, that is precisely the point. By allocating your Dollars in different areas of investment, you will be preparing yourself for any and all possible economic scenarios. The more diversified your portfolio is, the greater your chances of enduring an economic or financial storm.

There are both short and long term options for forex Dollar holders. While there will be those who will say that the situation is very grim, the truth is that by simply going over all the available options, there are still ways you can profit.