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The US Dollar Bull Market Special

News_Letter / US Dollar Sep 06, 2008 - 03:33 AM GMT

By: NewsLetter

News_Letter August 18th , 2008 Issue #22 Vol. 2 Dear Subscriber, The US Dollar ended the week with a sharp rally that confirmed the recent breakout and the base building that began following the March 2008 low of 70.70, analysis at the time suggested that the Dollar was heavily oversold and projected a target towards $78, which is now in reach following the USD Index close of 77.15 on Friday.


The Market Oracle Newsletter
August 18th , 2008            Issue #22 Vol. 2

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Best Analysis

The US Dollar Bull Market Special


Dear Subscriber,

The US Dollar ended the week with a sharp rally that confirmed the recent breakout and the base building that began following the March 2008 low of 70.70, analysis at the time suggested that the Dollar was heavily oversold and projected a target towards $78, which is now in reach following the USD Index close of 77.15 on Friday.

Last weeks continuing rally is taking the US Dollar into a short-term overbought state, especially as it nears resistance at 78, on break of which the US Dollar will target a move towards significant resistance at 80, following which the Dollar is expected to consolidation with the previous resistance levels turning into support levels i.e. Major support at 74.30 and 78, before the next leg up through resistance above 80 takes place towards a longer-term target for the dollar of 90.

US Dollar Chart

Whether or not the Dollar has seen its final low that brings to an end the 7 year long bear market, what the recent price action does signal is that the US Dollar is now in a bull market that looks set to run for at least a year, by which time the longer term trend will become more apparent, in that respect the bullish dollar trend is expected to continue into at least early 2009, which confirms analysis as early as of March 2008 that concluded that the commodities markets would enter into a bear market during the summer of 2008 that would last for at least 1 year and possibly as long as 2 years.

My recent articles have specifically warned Gold investors not to get caught up with gold bug fever by ensuring exposure to the precious metals is limited. If nothing else last weeks dollar action should send a clear warning to investors in precious metals sector and commodities in general to revisit their portfolio allocations as much of the demand for commodities such as gold has been built on the once unshakable investor premise that the Dollar is destined to continue drifting lower, which is clearly no longer valid.

Whilst the US Dollar immediately targets resistance at 80 on the USD Index, this translates into targets for the British Pound of 1.80, and against the Euro of 1.40.

This week we have managed to secure free unlimited access to Forex Forecasts From the World's Largest Market Forecasting Firm for our readership

From noon to noon on August 20 through August 27, you can have full, free access to Elliott Wave International's 24-hour-a-day forex forecasts inside EWI's Currency Specialty Service! Free Forecasts Access gives access to the following forecast services:

1. 24-hour forecasts of - EURUSD, GBPUSD, AUDUSD, USDCHF, USDJPY , USDCAD , DX, U.S. Dollar Index

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3. Access to 3 experienced Currency Specialty Service analysts – each with over 20 years of professional trading and market-forecasting experience.

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Your Dollar trend watching analyst.

Nadeem Walayat,
Editor of The Market Oracle

In This Issue
  1. US Dollar's Dramatic Rise Helps Level Currency Playing Field
  2. Crashing Global Economy Boosts Dollar as Interest Rate Differentials Narrow
  3. Gold and Silver Crushed by Unwinding US Dollar Shorts
  4. US Dollar Seismic Shift Hits Gold
  5. Yikes! Major Reversal in Fortunes for the US Dollar and Gold
  6. The Strong US Dollar Illusion
  7. Epic Gold Stocks Buying Opportunity
  8. US Dollar Short-Term Rebalancing of Expectations, Long Term Risk
  9. Fundemental Change as Global Economy Heads For Recession
  10. Gold Bull Market Correction Elliott Wave Analysis
1. US Dollar's Dramatic Rise Helps Level Currency Playing Field

By: Money_and_Markets

Jack Crook writes: After a dramatic two weeks in the currency market, I figured now is a good time to run through the recent action. Plus, I'll give you my outlook for the major currencies making the most noise. Let's get started ...

Read Article

2. Crashing Global Economy Boosts Dollar as Interest Rate Differentials Narrow

By: Prieur_du_Plessis

Almost exactly a year after the advent of the credit debacle, the term “credit crunch” squeezed into Britain's Chambers dictionary, defined as “a sudden and drastic reduction in the availability of credit”.

Read Article

3. Gold and Silver Crushed by Unwinding US Dollar Shorts

By: Mike_Shedlock

What's happening with gold should be no real surprise. Although I have stated many times that gold is money and gold should do well in deflation, and we are in deflation (see The Future Is Frugality and Implications of the Slowing Global Economy for the deflation case), in the initial stages of deflation, leverage in everything is reduced by force.

Read Article

4. US Dollar Seismic Shift Hits Gold

By: Christopher_Laird

A month or so ago, we told subscribers that the USD appeared to be bottoming. Long term, the USD has big trouble on the horizon, but we mentioned the USD has 9 lives, even though the US is running terrible deficits, trade and fiscal.

Read Article

5. Yikes! Major Reversal in Fortunes for the US Dollar and Gold

By: Black_Swan

Tell us again about the safe haven qualities of gold? It has been going straight down ever since Russia decided to spread its wings again. Maybe it's just a correction. But maybe it is, as it has always seemed to us, that gold is only a reflection of global purchasing power that simply ebbs and flows with the world's money and its safe have reputation is just that, reputation. And in case anyone was confused as to the world's money; it is the financial gurus' favorite whipping boy—the good old US dollar.

Read Article

6. The Strong US Dollar Illusion

By: Peter_Schiff

Economists who now see American troubles spreading around the world are predicting that foreign central banks will ignore the gathering inflation threat and follow the Fed down the rate cutting path. Similarly, they argue that since the downturn began here, the U.S. recovery will likely be underway while the rest of world is still decelerating. These assumptions have prompted a rally in the dollar, a sell-off in gold, commodities and foreign stocks, and have cast doubts on the ability of foreign economies to “decouple” from the United States. Investors should not take the bait.

Read Article

7. Epic Gold Stocks Buying Opportunity

By: Zeal_LLC

The precious-metals stocks did not take kindly to gold's steep selloff this week. On Monday the flagship HUI gold-stock index plunged 6.0% at the climax of what can only be described as a crash. In this event's final 3 days, the HUI bled 13.1% of its value. In less than a month, it had plummeted 33.1% by the time the dust settled!

Read Article

8. US Dollar Short-Term Rebalancing of Expectations, Long Term Risk

By: Joseph_Brusuelas

Recent price action in the foreign exchange market in our estimation is a function of a short-term rebalancing in expectations of global growth and demand for commodities. When combined with the pause in the rate hike campaign at the European Central Bank and growing uncertainty regarding the prospects for economic growth in the United States dollar bulls that have been lurking in the shadows for the past several years have re-emerged with gusto over the past two weeks.

Read Article

9. Fundemental Change as Global Economy Heads For Recession

By: Mike_Shedlock

The global economy is slowing rapidly. Let's take a look at some striking examples.

Germany, France, Spain, Italy

Bloomberg is reporting German, French Economies Shrink as Spending, Investment Falter .

Read Article

10. Gold Bull Market Correction Elliott Wave Analysis

By: Alistair_Gilbert

Captain Ron has presented his well-reasoned case for Gold for the Bulls today and whilst our long-term viewpoint is the same, I believe that this correction is not over in either TIME or PRICE yet. But correction it is, NOT the end of the Bull market.

Read Article

For more indepth analysis on the financial markets make sure to visit the Market Oracle on a regular basis.

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