The weakness of the U.S. Dollar has been well publicized over the past few months and has even led some to believe that an international currency war is upon us. While there is certainly a case to be made for this view, the fact remains that the greenback has been the recipient of investor disdain for some time now. As a result, many are wondering if we are nearing a point when the Dollar is likely to see a rebound. While I'm not ready to call a bottom just yet, there are certainly some interesting technical indications that are beginning to take shape for the bulls. Below is a weekly chart of the U.S. Dollar Index and a few comments on the technical developments.
My read, for now, is that the Dollar is likely to either continue its move lower or trade sideways for for the next couple of weeks. With equities obviously in rally mode and not likely to see meaningful resistance until the 1,175 level on the S&P 500, I suspect the Dollar will continue to be shunned until more bearish sentiment creeps into the stock market. Once that turn in sentiment takes hold, though, the move higher will likely be swift and fairly sizable. More than anything, following the Dollar at this stage of the game could be a good indicator of things to come on the equity side.
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