Market Timing the US Dollar: Falling Off the Ledge

How is the US dollar index (USDX) doing in the market timing realm? Not very well thank you.  Gold has broken out as have commodities and the US dollar broke the key 75.63 level I wrote about last week.  I felt it was unlikely that the Fed or the European Central Bank would want the dollar to depreciate further against the Euro (EUR/USD).  So despite the fact that the Bank of Japan has been helping the dollar through its own efforts to heal the Japanese economy, the dollar index is tied more to the Euro and has gone down despite that help.  Other currencies in the dollar index including the Canadian Dollar have been strong as well.

So the US dollar index appears to be headed toward the market timing low of 74.23, which is not far off. After that, if the Fed STILL takes no action other than the jawboning that has been done recently, the US dollar will crack back to the 70.70 market timing low hit in 2008 during the midst of the financial crisis.  That would be devastating to European corporate sales and would further pressure the economically fragile countries like Portugal.

If the 74.23 level holds and a US dollar index rally takes place from that market timing low, that could pressure stocks, gold and commodities, and that is why I keep an eye on it every day for my subscribers.

My latest SP500 Index numbers are here: Subscribe to my FREE SP500Tracker™ Market Timing Newsletter for immediate access

If you want to see the PREVIOUS issue: Previous Issue

Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.

© 2011 David B. Durand, M.D. All rights reserved.

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