Dollar Fails Crucial Test
The U.S. dollar failed an important technical test recently. Roll the videotape:
“This move has really lit a fire under the dollar bears,” says Chuck Butler. “Many institutional investors use the dollar index as their means of trading the dollar. And to see it fall through its 200-day moving average was enough proof for them that the dollar is heading south.
“The 200-day moving average, for those of you unfamiliar with this term, is a long-term moving average that helps determine the overall health of the asset, which, in this case, we’re talking about the dollar. It is, for all practical purposes, a dividing line, if you will, between as asset being healthy and one that is not.”
The dollar selloff has given a nice boost to other worldly monies. The euro popped to $1.36 over the weekend, and trades just a hair below that level this morning. Ditto the pound. It’s up as high as $1.52, just off its 2009 high. The yen is slowly growing stronger, now “down” to 97.