The U.S. dollar stands to become the hardest currency on earth if the Fed tightens in earnest. Even if they tighten only a little, as seems more likely, they will be the only central bank on earth doing it. Presumably, that would lend firmness to the dollar in a world of squishy currencies. We’ll be better able to judge the power pushing this rally once we’ve seen how in interacts with various hidden Pivot resistance points. Thursday’s push slightly past the midpoint pivot was unimpressive, but I expect USD to try again, and to gain momentum, once decisively past the pivot. If so, look for D=101.12 to be achieved by as soon as next Friday. Nothing could be more deflationary than a strong dollar, so we had better be careful what we wish for. My long-term forecast for this vehicle implies that highs recorded near 120 about 13 years ago will be tested. If so, the Fed and all of the central banks acting in concert will not be able to slow it down, let alone control it.______ UPDATE (December 28): The dollar index has turned weak, but the bullish look of the daily chart has not yet been affected. _______ UPDATE (December 29, 8:33 p.m. EST): Today’s Whoopee Cushion rally has changed the short-term picture. Now let’s see if it can get legs. _______ UPDATE (January 3, 7:38 p.m. EST): The rally has been picking up steam, with a thrust past a 98.62 midpoint resistance on Thursday that has put a 99.44 target in play. The new chart shows p, p2 and D, each of which can be used to set up trades from either the long or short side of the market. _______UPDATE (January 6, 9:32 p.m.): The target was reached, then slightly exceeded. This implies that the so-far shallow pullback since will be prelude to another rally leg — one likely to challenge December’s high at 100.51._____UPDATE (February 4, 12:59): The mountebanks who determine monetary policy, desperate for years to create a little inflation, had better enjoy the dollar’s weakness while it lasts, since the next bull leg is going to be a doozey. I have this correction coming down to 96.51.
