Weaker Dollar Coming Now?

On March 29 I posted an entry titled “Stronger Dollar Coming?” suggesting that the Dollar would gain strength as the consumer spending lessened. At the time the Eur$ was at 1.3440 and it did reach a low of 1.1875.

Today with the Eur$ in the 1.2660 area I see reason to believe that the reversal has begun with the information that follows in this posting.

As you are probably aware the Federal Reserve has a new program called Quantitative Easing, whereby the Fed purchases the securities of the government by printing money. Now that the mideast and fareast countries are no longer buying our securities as before, we are now buying our own.

The article referenced below is a must read for those of us who trade the Forex. The author makes a strong case for a weaker dollar. What this means to me is that the bias that occurs when the market drifts between major announcements will be in the direction of a weaker dollar. I will also trade any technical indicator in that direction even if the technicals are weaker than I would like.

Here is a quote from the article. “this second round of quantitative easing appears likely to continue. Unfortunately, the unintended side effect of this policy shift is likely to be an abrupt collapse in the foreign exchange value of the U.S. dollar.”

Here is the link for the full article http://www.hussmanfunds.com/wmc/wmc100823.htm