The Market's Most Obvious Breakdown

The greenback is starting to walk the plank this morning.

Now it’s only a matter of time before it breaks down and moves sharply lower. When it does, it will complete the final part of a downside move that’s been forming for the better part of the past six months…

US Dollar Failure

The U.S. dollar index didn’t even come close to its July highs during its fall rally. Instead, it’s feeling out its next move lower. The breakdown zone is right near 79 — a mark that’s getting closer every day. When we do see a meaningful move below 79, the reaction is set to be a swift drop that will eventually drag the dollar down toward 2011 lows.

Of course, it doesn’t hurt that the Fed’s aggressive easing policies continue to escort the dollar lower. Just yesterday, the Fed announced it will continue its $85 billion bond-buying stimulus plan in an effort to achieve lower unemployment. Meanwhile, the dollar drops to a 13-month low against the euro, according to Bloomberg.

There are numerous technical and fundamental factors stacking up against the dollar right now. It’s time to watch these levels closely and prepare for a dollar dump…

Greg Guenthner
for The Daily Reckoning