The U.S. Dollar (DXY): Ripe For A Downside Reversal?

Why would anyone step in front of the Northbound train that is the U.S. Dollar in foreign exchange dealings right now? Here are just a few bullish arguments from Wall Street analysts claiming that continued strength in the Dollar is a sure bet:

1. The U.S. Dollar Index (symbol DXY) is up 26% since May 2014, with almost no meaningful corrections along the way! Is the "trend" still your friend?

2. The Federal Reserve is hinting strongly that an interest rate hike is now on the not-too-distant horizon (June 2015 seems to be the consensus view for this action).

3. John Hilsenrath of the Wall Street Journal, who appears well connected to Fed officials (or is just the mouthpiece for the Fed when a policy change may be imminent), wrote an article earlier this week that the key word "patience" will be dropped from the Fed's official statement that will follow the upcoming March FOMC meeting. With this key word gone from the next Fed statement, Wall Street pundits are now proclaiming that a rate hike would then be imminent (within two or three months).

4. The European Central Bank has just started its 16-month $1.1 trillion QE program.

5. U.S. Employment Reports have been surprisingly robust over the last several months (at least on the headline numbers).

The Greenback is King right now! And maybe deservedly so!!

Today, the U.S. Dollar Index (symbol DXY) traded as high as 100.06 intra-day, before relatively minor profit-taking took hold. DXY ended at 99.44. Today's advance above 100.00 was the first above this key level since April 2003.

After 35+ years experience observing and participating in the financial markets, I feel confident in saying that almost any market opinion can be justified with a well constructed suite of carefully selected charts. However, with full knowledge that charts can sometimes be dangerous to your pocketbook, I still spend most of my research time reviewing my favorite charts and applying all my favorite indicators. 

Bottom Line: The U.S. Dollar now looks vulnerable to a meaningful correction! Here are a few charts that lend support to this minority view: Of course, if the Dollar does break now, then my current favorite investment of choice, Gold/Silver mining shares, will soar !!

U.S. Dollar Index (DXY) Monthly Chart with 3-Std. Dev. Bollinger Bands, Gann Lines, & Fibonacci Retracement

U.S. Dollar Index (DXY) Weekly Chart with 3-Std. Dev. Bollinger Bands and Computer-generated Buy & Sell Signals