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usd

Look for the dollar to bounce here, but it should be nothing more than a dead cat bounce. After that it should easily break through its 200 MA, as the Fed continues to devalue the US dollar. I really question the Fed’s strategy here as they continue to believe that once the credit markets start flowing again everything will come up roses again. What they fail to grasp is that nobody really wants to borrow money right now as many people’s perceptions of the economy is very dark right now, and with good reason.

Then they’re are many people who statistically can’t borrow money because they’re laid off or already have to much debt to deal with right now. I rarely use fundamentals in my analysis, but I believe this is one case where all you have to do is use a little common sense to realize that unlocking the credit markets isn’t going to save the US economy. Easy credit is what got us here in the first place.

Source: Negative Divergence on the U.S. Dollar