New wave of alarmist headlines is sweeping the world of investment letters. This time it is the Dollar Index, which is making new low for the year. Once again, many predict immediate doom and gloom to both USD as well as other financial markets. Well, maybe, but not just yet. According to some, weakening (debasing) of the Dollar is the only way that our government will be able to repay our mountain of debt. If ever. So, unspoken policy of weak USD is a fact. With other nations picking up on it, the process is accelerating and will lead to serious consequences.

That very well may be true, but not just yet, tomorrow or the day after. The Dollar Index (DX), has, in fact made new low for the year when it dropped under 77 level. However, it is still far away from the low of early 2008, before financial crisis exploded in full. The 70.80. or so level is the one to watch. Should USD fall under it, than, yes, long term perspectives are not promising. Until this happens, DX is just another financial instrument making a new price extreme for the year. Nothing more, nothing less. Certainly not a harbinger of some catastrophe. Personally I think that support of 70.80, will prove significant. For now at least. Longer term, though, it is likely to give way, unless we put our fiscal house in order.

Here is another look at the Dollar Index, in a form of video analysis.
http://www.ino.com/info/445/CD3908/&dp=0&l=0&campaignid=3

Day has been busy so far, with two central banks having policy meeting. No surprises. Bank of Japan left rates unchanged at 0.10%. Swiss National Bank also stayed with current level of 0.25%. Franc recorded a nervous spike, which triggered my EUR-CHF buy order. Trade is under way, will probably last for a few days, given how slowly this pair acted recently. Another trade, sell of NZD-CAD, reached its target and is now closed.

One more sell order is still active, at 0.7539. I’m leaving it for now, although I’d like to see price bounce before it proceeds lower. If another support point point is established at around the same level, it becomes more important. Once broken, chances for price moving faster farther are greater. This is, of course, on my wish list. Market will do what it wants.

One more order, this time a buy in GBP-AUD. This pair has been falling, well, forever. Hourly chart is trying to paint a bottom, if short term only. That is hard to determine. I’m looking for a short term reversal here, as dictated by this time frame. Buy order stands at 1.9000, with 130-140 pips target. If this comes to successful conclusion, I will try to decide if this is a beginning of something bigger, 1000-2000 pips move up. It is certainly overdue.

Mike K.