Greg Guenthner

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

Greg Guenthner

Greg Guenthner, CMT, is the managing editor of The Rude Awakening. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.

  • Pfc. Parts

    Greg it isn’t really obvious from your chart. It looks like the dollar did well during the summer vacation season, fell afterwards and is on a slow but steady increase.

    That’s the way I read the chart. Perhaps I’m missing the obvious?

  • Stephen Jacobs

    The chart above looks bearish for the dollar, but gold looks very bearish at $1575. Gold looks headed for $1000 to $1200 maybe and then later on down onto $1000. And then wait this bear thing out and pick the pieces up around $800 to $900 or lower possibly.

    PEOPLE MY AGE REMEMBER THE LAST BEAR MARKET WITH GOLD, AND BEAR MARKETS WITH GOLD ( OR ANYTHING ELSE ) DIE OF EXHAUSTION. The gold bear market series of cycles can go on for five or the better part of ten years, and playing each cycle embedded in it is like catching a ride on a falling knife….The bargains come and go, only to come again even better, as the entire market is cut away.

    No-one knows where gold is headed, but the atmosphere in the world currently now is quite deflationary. Interest rates are zero and paper money is gaining value, albeit slowly. Prices are falling, albeit slowly. Wages are steady or declining, if you have work at all.

    If you shove someone outside, they end-up into an economic/political rut. In Watsonville, California I am in the orbit of the Obama Democrats in California, and I will vote for President Obama or his recommended candidates, just as everyone else will, because the economic/political rut is gravitationally that way on my brain and on my bank account. We “lean forward”.

    People with billion dollar bank accounts might not understand Watsonville, CA nor care to understand Spanish, immigrants, skateboards, laughter, pets, hot rods, dating, and liberalism. Their economic/political rut is gravitationally maybe with the oil and cattlemen in the Republican Party in Texas.

  • Stephen N. Jacobs

    As the U.S. exports more and more oil, the dollar can walk all the planks it wants, but more and more dollars are coming back to America to buy its oil. What do dollar traders say about that?

    The only way for the dollar to then fall off its plank is for Bernanke to do a wholesale print job to make it fall off its plank….. Anything is possible, but I doubt that would happen.

Recent Articles

Bill Bonner
An Easy Way to Avoid Pig-Headed Mistakes

Bill Bonner

Taken individually, most people perform relatively well in their daily lives. They get up, drive to work and interact with various other people, largely without incident. But when big groups of people get together, they can be incredibly pig-headed, demanding "action" when the best course of action would simply be inaction. And before you know it, chaos ensues. Bill Bonner explains...


Attack on America’s Most Important Pipeline

Byron King

America's most precious resource isn't oil, natural gas, gold or any other commodity. But it travels through an extensive pipeline that, if severed, could signal an unprecedented breach in U.S. security. What is this pipeline, and why is it so imperative that the U.S. take steps to protect it? Byron King explains...


3 Critical Correction Warnings

Greg Guenthner

The S&P 500 just clocked a new closing high last week, while the Dow and the Nasdaq both fell just short or their previous highs. But under the surface, you'll find a few bits of evidence pointing toward lower prices. And right now, there are seeing several warning signs that could point to market weakness. Greg Guenthner explains...


Extra!
Where You Can Make $56,000 a Year Delivering Pizzas

Jim Mosquera

US unemployment rates are some of the most dubious and debatable numbers in economics. And when you look at how the government fudges them it's easy to see why. Today Jim Mosquera attempts to make sense of them, and includes an insightful commentary on another controversial topic: minimum wage. Read on...


Addison Wiggin
The Quickest, Easiest Way to Store Your Wealth Overseas

Addison Wiggin

Over the years, the feds have made it increasingly difficult for you to maintain any semblance of financial freedom. So today, Addison Wiggin details one strategy that will go a long way to keeping them at bay, and allow you to keep more of your hard-earned money in the process. Read on...