Is it Time for a Dollar Rally?

With many Forex market analysts and investors convinced that the dollar is about to collapse one should be thinking that it may be time for a US dollar rally. If you are technically inclined you may well be inclined to take the extreme dollar negative sentiment as a buying signal, at least for the short term.

We have made a number of videos on the dollar index. In our latest video I show you some of the aspects we outlined in our previous video that have come to pass.

The positive divergences on the MACD indicator which we discussed last time have kicked in and pushed the dollar index higher. The longer term major trend for the dollar index continues to be negative. In this short video you’ll see what the market is doing now and what we expect it to do in the future.

One thing to watch carefully is the recent interaction between the dollar and the US stock market. A stronger dollar has had a high degree of correlation with a sell off in the stock market. This probably has a lot to do with risk aversion. As stocks weaken investors move cash into the dollar as a “safe haven”.

Yes, we know that the dollar has many challenges just now. For example, there are US government sky high budget deficits forecast for as far into the future as we poor humans can see. However, as sorry as the prospects for the dollar may be when compared to other fiat currencies, such as the Euro, the dollar still seems to be the best of a sorry lot. At least for now.

So, the question remains. Is it time for a dollar rally? Look at the video, look at the chart, and decide for yourself if the dollar looks like it will get stronger from here. As always our videos are free to watch and there is no need to register.

Dollar Chart and Forecast