U.S. Dollar weakness is a foremost concern of mine. As such, I have extensively written about it. I am very concerned that the actions being taken to “improve” our economic situation will dramatically weaken the Dollar. Should the Dollar substantially decline from here, as I expect, the negative consequences will far outweigh any benefits. The negative impact of a substantial Dollar decline can’t be overstated, in my opinion.
The following three charts illustrate various technical analysis aspects of the U.S. Dollar, as depicted by the U.S. Dollar Index.
First, a look at the monthly U.S. Dollar from 1983. This clearly shows a long-term weakness, with the blue line showing technical support until 2007:
(charts courtesy of StockCharts.com; annotations by the author)
(click on charts to enlarge images)
Next, another chart, this one focused on the daily U.S. Dollar since 2000 on a LOG scale. The red line represents both a (past) trendline as well as a relatively good visual “best-fit” line. The gray dotted line is the 200-day M.A. (moving average):
Lastly, a chart of the Dollar on a weekly LOG scale. There are some clearly marked channels, with a potential large, prominent triangle featured (shown with two potential lower trendlines, one red and one dashed light blue line):
I will continue providing updates on this U.S. Dollar situation regularly as it deserves very close monitoring…
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1635.70 as this post is written