We’re getting some technical confirmation of another major leg up in the buck [confirming my assertion that] we are in the midst of a multi-year bull market in the dollar. Today, I want to put forth 9 reasons why the dollar may have bottomed, show you some current technical analysis on the buck, and share my long-term target for the euro. Words: 703
So says Jack Crooks (www.moneyandmarkets.com) in edited excerpts from his original article*.Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Crooks goes on to say, in part:
My nine original reasons why the U.S. dollar may have bottomed (as they appeared back in November 2011) are as follows:
I don’t have any changes from what I wrote in November, except to say two things:
Can You Say “Breakout”?
Just this week, we saw some major confirmation of yet another leg-higher in the U.S. dollar index with a breakout above key resistance at 80.78. My longer term target this year is for a test of the 89.62 March 2009 high (this was triggered by the credit crunch crisis risk bid for the dollar).
Keep in mind, the dollar index is effectively a mirror image of the euro given the euro represents about 58 percent of the dollar index weighting – and the other currencies in the index (with the exception of the Japanese yen) tend to move in correlation with the euro.
Stocks Down and the Dollar Up
There continues to be a tight correlation between the U.S. stock market and the dollar. It is a tight negative correlation i.e. as stocks go up, the dollar tends to go down, and vice versa. I am quite bearish on stocks and believe this correlation will continue for a while longer.
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Below is a chart comparing the Dow Jones Industrial Average (black line) to the U.S. Dollar Index (blue line) on a weekly basis. I have added my projected path for each index.
What I See for the Euro
My long-term target for the euro is down around par i.e. 1:1. Sound strange? Keep in mind when the euro was first initiated back in 2000, it quickly sunk to around 0.8400 against the dollar. Given the crisis in Europe and expected deep recession even if the euro as a single currency survives, I don’t think a target near 1:1 is too crazy.
The global macroeconomic environment seems to be deteriorating. Despite the fact the U.S. has its own major problems, in a world where global rebalancing is still playing out, economic growth is fading, and risk is rising, the dollar wins — warts and all.
*http://www.moneyandmarkets.com/what-i%e2%80%99ve-been-waiting-for-confirmation-the-dollar-is-heading-up-49750 (To access the above article please copy the URL and paste it into your browser.)Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Understanding what we are facing right now is critical to our survival…. [and to do so] we must embrace a global correlation approach to comprehend the true global implication of how capital moves. [Martin Armstrong provides a remarkable explanation of what is going on right now with the U.S. dollar, bond yields and the current price of gold. It would be well worth your time to read and reflect on what he has to say.] Words: 822
Merk Investments has ranked the attractiveness of the currencies of each G10 country based on the monetary and fiscal policies of each country and the strength of each country’s economy to come up with what they call the Merk Currency Score™. This Score should prove invaluable in supporting investment decision-making across countries and regions. Go here to see where your country ranks. Words: 367
The disaster in Europe should be pushing the U.S. dollar up more than it is but it’s not, and that has me deeply worried. [I'm] worried that the next leg of the dollar’s decline may be right around the corner; worried that the loss of the dollar’s reserve-currency status could occur more quickly than even I had expected and worried that the “X&@!” may soon hit the fan, across the entire globe. [Let me explain.] Words: 600
FavStocks.com - We’re Getting Confirmation of a Major Leg UP in the Buck!