USD index due for reversal

The US Dollar Index is due for a reversal of the downtrend from its 52-week high in June 2010 on a backdrop of technical and fundamental factors…

Technically, the chart says it all…

Technical Analysis of US Dollar Index - 21 July 2010

Source:stockcharts.com

US equity market charts have broken down … US equities indices are inversely correlated to the US Dollar… hence a weakness in equities will push the US Dollar higher…

Fundamentally…

  • weakness in Euro area due to the omnious soverign debt crisis
  • downgrades of sovereign debt and Euro area bank debts
  • earnings of US companies have been sub-par to say the least with mostly lower guidance for coming year…
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