The US Dollar decided that enough is enough!!!

It caught a lot of people by surprise but the US dollar finally decided that it was not going to stay it. Over the last 18 months the dollar had been hitting new lows against most major currencies. The state of the US economy has not helped and the continuous rise in the prices of gold and petrol have added to the demise of the dollar. However, after consolidating for a while, the dollar found it’s feet and staged a fight back. The US dollar rally took a lot of people by surprise, but if you had followed the charts, you would have noticed that dollar had it a bottom in April and had been consolidating since then, a good signal for a potential breakout.

Going forward, the US dollar looks oversold on the daily chart, but on the monthly charts it looks like the rally is just about to commence. That means there might be a short term pull back, but the dollar still has more upside potential.

The charts show the movement of the US Dollar index which gives an indication of the strength of the US Dollar against some other major currencies. I'll talk about the US Dollar index in a future post.