A short term bottom for dollar

I'm travelling this week and therefore will be quick with a brief note of the dollar trade. As I said back in July, US$ is likely entering a long-last downtrend that may be a few years before its end. At that time, US$ was at around $100 and now it is in low 90s. You may not feel it is a big deal but for a major currency, 5-10% move within months is actually very significant. The question is whether we have seen its bottom by now? Yes and No depending on your time horizon. I still believe that there is a lot more for US$ to go down in the next couple of years, probably another 10% or so at least. Having said that, the current fast downward drafting for dollar may come to a pause in the short term. From the technical perspective, dollar has shown a bottoming pattern on its daily chart with a clear negative MACD divergence. This often suggests a turnaround is near if not already in. This may last a few weeks to months depending on how strong the rebound will be. But its weekly chart is still very bearish and has not shown any bottoming sign! That's why I strongly believe it will resume its downtrend following a rebound and reach a much lower point in the next 1-2 years.


This aligns very well with the price actions for precious metals like gold and silver. They have got a very strong upward move lately along with the weakening dollar and has broken out its several years' downward trend line. This is very impressive but it needs some rest in order for more sustainable appreciation for the long run. So I think gold/silver will be weak in the near term but will continue to move up more strongly after the weakness.