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Dollar Rally

One of the many reasons given for the fall in commodity names is the rally in the US Dollar, from over $1.60 to the Euro to under $1.50 to the Euro.

The graph above of the US Dollar Index shows that the dollar is moving within its downward trend and at this point it is still clearly within its bear market.

If the dollar can strengthen and break out above the top channel line, then we may have more than a bear market rally. Until then, the trend remains in charge and the poor fundamentals of the US economy – deficits & a weak financial system – are likely to keep the trend moving lower.