Has the U.S. Dollar Bottomed?

By: Donald_W_Dony

Following the January 04, 2018: Market Minute titled: U.S. dollar weakness provides short-term lift to commodities, the $US has been declining for the last four weeks, much to the benefit of many commodity prices and gold in particular.

Since mid-December, the $US has fallen about four percent and gold has advanced over seven percent.

However, the dollar is now on a key support level at $0.903 and gold is finding some resistance at $1330 to $1340.

The dollar index is receiving ongoing head winds from several other countries, which would explain the recent weakness.

For example, two of the dollar's major competitors (Europe and Japan) are growing at an equal rate or higher rate than the U.S.

The Euro zone's annual GDP growth rate and the U.S. has increased by 53 percent from Q3 2016 to Q4 2017 and Japan's normally sadate growth rate has bolted-up over 200 percent during that same time period.

Technically, at this junction, there is no positive evidence to suggest that the U.S. dollar index or gold are at an intersection point. Their current trends are still in play.

Bottom line: As the annual GDP of the U.S. continues to be "out gunned" by other economies, other currencies besides the "Big dollar" are having more appeal to traders.

This disinterest in the $US is likely short-term. Nevertheless, the present weakness in the dollar is a boom for many commodities.

The current junctions of the U.S. dollar and gold, we believe, are key markers to watch over the next few weeks.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2018 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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