Front and center on the index page of the biiwii website, we have a running chart of the US dollar updating daily and showing its progress after breaking down from a rising wedge in the first week of '06. In an article entitled Dollar Daze, we showed why the dollar may be bullish beyond the short term. However, we again note top callers coming out of the woodwork, calling for an end to the current gold/silver miner rally, the broad market rallies and the general commodities rallies. And they may be correct, as the dollar could break through resistance at any moment and continue its rise to the minimum 38.2% bear market retracement that we, and many a currency trader, are looking for. But thus far, the dollar's recent strength is merely a rise to test the short term break down until it proves otherwise. On the bullish side, RSI & MACD have broken their downtrends. On the bearish side, AROON still shows a negative trend and STO's may be in a topping range. Stay tuned.
In trying to determine the dollar's coming moves, it will of course be helpful to watch competing currencies, first and foremost the Euro. Here we see an inverted picture of the walking contradiction that is the USD. The Euro chart pattern still looks like a short term bottom to these eyes although recent action looks a bit heavy.
The Canadian dollar's bullish stance remains intact. In fact, that little hammer-like candle may have been a successful test of an ascending triangle breakout. This "commodity & resource" based currency, if it remains bullish, argues for at least another leg up in gold, silver and commodities of many different stripes. The inflation trade has been on such a torrid pace for so long that it seems everyone is trying to guess the top. The charts will tell us all we need to know.
For a little comic relief, we toss in the Japanese Yen. The USD has little on this basket case when it comes to currency debasement for the sake of economic growth. Still, the Yen could be approaching at least a short term bottom.