It’s Make Or Break Time For US Dollar!

| October 25, 2013 | 0 Comments

earnings-seasonInvestors the world over are anxiously eyeing the US Dollar.  Ever since Congress wrongfully decided to kick the US budget and debt ceiling decision down the road, the Greenback has lost ground.

Take a look…

US Dollar

As you can see, it has been nothing but pain for Dollar bulls since October 16th.  The currency is in virtual freefall thanks to the reprehensible actions of our elected officials in Washington DC.

And take a look at this…

US Dollar

As you can see in this long-term chart, the selloff has the Greenback trading near an essential long-term technical level.

Ask any currency trader and they’ll tell you this level is vital for the US Dollar.

You see, the Greenback hasn’t traded at $79 (green line) since February of 2013 (red circle).  As you may remember, that’s when Federal Reserve Chairman Ben Bernanke started toying with the idea of winding down their $85 billon a month stimulus program. 

Dollar bulls went on a rampage throughout the Spring and Summer months as a result.

But then confidence started to wane…

Doubts arose about the strength of the global economic recovery in July.  And as we rolled into August and September, investors found the Fed was getting wishy-washy on their tapering ambitions.

And when US Budget negotiations and debt ceiling talks hit a snag in early October, the idea of Fed tapering went down the toilet… right along with the US Dollar.

What happens if the Greenback breaks below $79?

If the currency can’t hold this level, investors will start rushing into hard assets en masse. 

In fact, gold, silver, platinum, and palladium are already seeing a massive increase in buying interest thanks to the Dollar’s recent downturn.

Why the sudden rush for precious metals?

It’s simple… 

…Investors are starting to doubt the Fed’s credibility. 

After teasing the market for months about their tapering plans, they’ve now all but abandoned them.  In fact, most economists don’t see Fed tapering until mid-2014 at the earliest.

And that’s not all…

Americans will be dealing with this whole debt-ceiling debacle again in a few months.  And as we’ve already learned, nothing breeds mistrust in a nation’s currency like flirting with national default.

Bottom line…

Commodity investors will be well served by keeping a close eye on the US Dollar over the next few weeks.  The next move in the Greenback will dictate the direction of precious metals into year-end.

Until Next Time,

Justin Bennett

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Category: Commodity Trading, Precious Metals

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.