Friday, September 8, 2017

US Dollar Watch

Sometimes a very long term chart can provide a perspective that you don't get looking at a much shorter time frame. Now that the US dollar has sunk into the potentially key 90-92 level, perhaps a look at its long term chart would be worthwhile.


Note the very long term downtrend in play. In the last major crisis in 2008 the US dollar sunk to an all time low just above 70 on this index. It appears that the next key area lower to watch is the 85-86 area. Failure to hold there could well indicate we are headed back down 80 fairly quickly. If you see the dollar drop below 70 at any time in the coming months or years, we would then be at new all time lows. Just below is a look at how the dollar has done over the past one year.

It is oversold right now and should bounce in here somewhere soon. If it does not, the 80 level seems likely to arrive fairly quickly. It has only taken about 4 months to drop nearly 10% down to the present level. I will remind readers of this note we published on 8-1-17 about Jim Rickards forecast on the dollar made to me by email back in March of this year.

My email to Jim dated 3-27-17:

"I am not a technical analysis expert by any means. However, this chart indicates to me that the USD has once again reached an important support level here around 99. It appears to me that if that fails, 95-97 would show up pretty quickly. After that, an even sharper drop looks possible. 

If you look back in time the 99 level seems pretty pivotal and the 200 day average sits just below right now at 98.44. The last time this happened the dollar held and rallied. So the next few days/weeks are probably important for direction if I read this chart correctly."

Jim's email reply dated 3-27-17:

"I expect the dollar will hold, and gold will pause to catch its breath, but only temporarily.

By late June or early July, I expect the dollar to come down a lot and gold to rally. We're just not there yet.
We'll need one more Fed rate hike in June to drive a spike in the economy. Then the Fed will flip-flop to ease again, and we're off to the races."  ------    James Rickards
Added note: Venezuela, which has suffered a horrific devaluation of its own currency lately, will now try to get away from the US dollar if possible.

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