I’ve been in the dollar bear camp for quite some time. It’s not hard for me to admit that, as things stand as of now, my view has been wrong. It’s nothing wrong with that. What would be wrong is staying stubbornly in a position and doubling down despite the facts proving me wrong.
I recently wrote a post FX markets about to get interesting again! where I argue that despite the path currencies may take take, there is one that’s most likely. That is a path of higher volatility. Now I’d like to update you on the topic. In this post let me show that the dollar could be starting a new secular bull run.
Here is a chart of trade weighted US dollar broad index composed by FRED dating back from early 1970s.
Despite Donald Trump trying to talk the dollar down, it’s making fresh all time highs. This on it’s own should be telling enough. But not only that, the price was consolidating for 20 years now and it has formed more than a solid looking base, suggesting we’re yet to see a proper dollar bull run. Until the price is trading above 125-130 level we have no other option but to call this the start of a new secular bull trend!