• 703 days Will The ECB Continue To Hike Rates?
  • 703 days Forbes: Aramco Remains Largest Company In The Middle East
  • 705 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,105 days Could Crypto Overtake Traditional Investment?
  • 1,109 days Americans Still Quitting Jobs At Record Pace
  • 1,111 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,114 days Is The Dollar Too Strong?
  • 1,115 days Big Tech Disappoints Investors on Earnings Calls
  • 1,116 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,117 days China Is Quietly Trying To Distance Itself From Russia
  • 1,118 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,122 days Crypto Investors Won Big In 2021
  • 1,122 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,123 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,125 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,125 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,129 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,129 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,130 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,132 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Why the U.S. Dollar's Bull Market is Over

Some currency traders and investors like Jim Rogers believe that the U.S. dollar is still in the midst of a massive bull market. They argue that the U.S. dollar's decline since March 2015 is merely a correction and that the U.S. dollar's bull market still has 1-2 years left. I disagree. Many signs indicate that the U.S. dollar's bull market is already over.


Weakening U.S. economy

A big factor that drove the U.S. dollar's bull market from Q2 2014 to Q1 2015 was the strength of the U.S. economy. U.S. economic data was very positive in 2014 while European, Asian, and other economies were deteriorating.

However, the U.S. economy is deteriorating as well now. Although I believe that a recession or bear market is not around the corner, that doesn't mean that the U.S. economy will not continue to deteriorate.


The U.S. dollar's "correction" is too long

If the bulls are correct, then the U.S. dollar has been in a correction since March 2015. Here's why this argument doesn't make sense.

If the U.S. dollar is still in a correction, then this correction will have lasted 7 months and counting! Historically speaking, none of the U.S. dollar's corrections within bull markets lasted this long. Most corrections last up to 4 months.

The following illustrates the U.S. dollar's bull markets in the 1980s and 1990s. As you can see, corrections do not extend beyond half a year.

The U.S. dollar was in a bull market from 1995 to 2001.

  1. The U.S. dollar began a big correction in August 1997. It made a new high in just 4 months.
  2. The U.S. dollar began a big and long correction in August 1998. It bottomed 2 months later and promptly rallied back to its old highs.
  3. The U.S. dollar started a big correction in July 1999. It made a new high in February 2000, a mere 6 months later.
  4. The U.S. dollar began a big correction in October 2000. It made a low by December and promptly rallied.

The U.S. dollar was in a bull market from 1980 to 1985.

  1. The USD started a big correction by August 1981. It made a bottom less than 4 months later and promptly went back to its old highs.
  2. The USD began a correction in November 1982. It bottomed less than 2 months later in January 1983.

Thus, it's obvious that the U.S. dollar's recent bull market is over and is now making a flat top. The U.S. dollar can at most retest its March 2015 highs.


The Euro has been firmly supported by its 200 sma

The Euro has firmly broken above its 200 daily moving average since August 2015. Most 200 daily moving averages aren't very useful indicators. For example, gold, silver, and the S&P 500 frequently make false breakouts and breakdowns around their respective 200 sma's. But not the Euro. The 200 sma is a very effective indicator for determining whether the Euro is in a bull market or a bear market.

History shows us that whenever the Euro breaks above its 200 sma for more than a month, the Euro's bear market is over and its bull market is about to begin.

The following chart illustrates the Euro breaking above its 200 sma right now.

Euro Chart
Larger Image

In addition, the Euro's 50 sma has crossed above its 200 sma. This "golden cross" typically characterizes the end of bear markets.

 

Back to homepage

Leave a comment

Leave a comment