The Buck

Here is a weekly chart of the US Dollar Index. I read so many articles talking about the doom of the dollar, yet we look at the chart and we are 6% above the low of 2005. Maybe the forecasters are correct, but we are certainly not in a huge freefall at this point.

Admittedly, I am not a gloom and doomer because I just do not buy into these extreme theories in either direction. There are seasonal decline tendencies in this market here, but until we break out of the downside of this triangle, the short term trend is up. Longer term, we are still underneath the trend down off the highs of November, so essentially in a holding pattern right now.

Sometimes when I am confronted with extreme predicitions I try and imagine what the world would be like if they are true. If I can imagine it then I give them some credence. If I cannot then I just brush such theories aside. The huge dollar decline theories are hard for me to imagine in this way for some reason. This does not mean we will not go down, but some of these huge % drops I read that are forecasted seem a bit out of whack to me. The Fed so far seems to be managing the housing slowdown pretty well, so I do not see why they cannot do the same if the dollar begins to drop quickly. In any event, the chart above does not show any immediate danger unless we break down below the recent up trend line.