Considering how steeply the dollar has fall in recent months, we might have expected more of a bounce when the selling finally let up. Instead, since mid-March, we've gotten a rebound so feeble that, on the daily chart (see below), the Dollar Index has yet to exceed even a single peak recorded on the way down. To put this weakness in perspective, and based on our Hidden Pivot rules, it would take an unpaused surge surpassing at least two 'external' prior peaks to even hint of an important trend change. That would imply a print at 73.96 in this instance ' roughly 2.5 percent above yesterday's settlement price. That might not seem like much, but considering how sluggish the rallies have been lately, it might as well be the Matterhorn. We should also note that on recent days when the dollar has fallen, it has tended to reach or even slightly exceed the targets of minor-cycle declines. If it were about to turn around, we should have expected these declines to fall short of their targets, and for rallies to exceed theirs. Is the dollar's flatulence indicative of more weakness to come ' or is it simply taking its time to build a solid base for a powerful and long-lasting rally? We incline toward the first explanation and expect the dollar to resume its decline in earnest by no later than mid-May. But we'd have to concede that this hunch is based mainly on our inability to imagine any fundamental change in the forces that have been weighing on the dollar for so long. The Good Old Days In the good old days, prolonged weakness in the dollar made American exports more attractive, bolstering global demand for the dollars needed to buy them. That is still true, but to a
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