Yes I continue to believe that people are extrapolating the Dollar index into the future in terms of bullish expectations because sentiment is extreme. We are still at the 61.8% level near 102. So the upside will be limited and once the trend changes it maybe done for good. 8 years of bullish dollar is the
historical cycle.But that does not mean tomorrow morning but soon. The same is true for Gold that is in a prolonged wave 2 decline long term. Wave 2 can be deep so it has been. It would have been nice to get 61.8% to hold but that does not change the larger picture.
The following chart of the Dollar and Dow captures the history of the Dollar crisis. The last dollar bear market was from
1985-1992 [not shown], 7 years and then from 2001-2008 another 7 years. Similarly the first dollar bull run in recent history was from 1992-2001, 9 years. The current one is from 2008+9=2017. The 1992-2001 bull run was in two phases. The first phase blew up Asian tigers and created tremors in Russia and LTCM. The second phase coincided with the Y2K bubble popping. We have been through the first wave this time that hit EMs and Commodities, the second wave started some time back and given the time
cycle should see the the US Equity bubble prick in 2017. The dollar may however not extend as far as last time simply because it is already at key retracement levels. The 2001 top ended at 50% retracement to the previous bear market of the dollar. The current one is already at 61.8%. The last time the dollar bull run went on even as US equities were falling. This time I doubt the two will diverge so far because of the speed at which central banks are reacting to these trends and that we are
already at key levels and at the end of a cycle period.
