The US Dollar: The Lion of Currencies




The US Dollar: The Lion of Currencies


When looking at the Forex market currency pairs, it’s important to factor the US DOLLAR into the equation. As shown on the above forex currencies of the Canadian Dollar, the Swiss Franc and the Japanese Yen, the primary dictator of direction for those forex pairs mentioned is the US DOLLAR.

As the red circled area on the charts show, when the USD is the first currency of the pair, the trend direction and strength is clearly upwards.

The strength of the US Dollar is what’s swinging the other currencies to the downside trends they’ve been experiencing and is literally ‘baked into the cake’ as part of the dance of price swings we see in the markets.

The reverse side of this is that when the USD is the second currency of the forex pair as with the EUR/USD; GBP/USD; AUS/USD or NZD/USD then the US Dollar strength is acting to drive those currency pairs downwards in price and is what’s continuing those downtrends over time.


Click Chart to Enlarge

However, nothing moves forever in only one direction and the end of the strength of the US Dollar is beginning to come into view.

History and mathematics rule the movements of commodities, stocks and, yes, even currencies.

One of the tools we can use to anticipate what’s ahead is a long-enough time perspective to view what’s happened before in History.

There’s a rhyme to historical price trends and previous price points can often set future price resistance levels.

In the case of the US DOLLAR, observe the 3-charts provided for just that perspective. The first we see on the left is showing that the US Dollar has just taken out it’s 5-Year Highs.


Click Chart to Enlarge

As price continued even higher, we had a basis for expecting that our next target would be the 10-Year Highs.

This is exactly what has happened and is approximately where the US Dollar is presently.

Price turned on a dime (pardon) upon hitting the previous 10-Year High and has consolidated it’s price actions to date with a recent move upwards to retest the High.

This will be a price point to watch carefully for indications of growing strength.

What’s next then?

Well, prices could weaken from here, but, there’s no hint of that in the least at the moment.


Click Chart to Enlarge

A more likely scenario is that the US Dollar will continue it’s upwards journey to test it’s 25 and 26-Year Highs.

This 110-115 area is a very strong price Resistance area going forward and this price area is shown on our last chart to the left.

It’s also a large increase from where we presently are and, so, will have a great deal of impact on the other currencies.

The implications of a US Dollar move to these highs again will be most negative (for value) and deflationary for currencies like the Australian Dollar, the British Pound, the New Zealand Dollar and, of course, the EURO.

It’s fascinating to use price histories for predictive purposes like  these as the pure truth speaks from the charts (when it comes to long-term anyways), as no politician or even greedy plutocrat can see beyond the next quarter never mind viewing events taking place over spans of years and decades. With the use of long-term charts we thus become immune from the propaganda of the press, politicians and investment houses who are desperate to increase their ratings, votes or quarterly returns no matter what the cost in truth or treasure.

When we’re fortunate enough to filter out these characters from the Economy, then, we’ll find the true trends without the rhetoric and can better prepare ourselves for the future events. – George