U.S. Dollar is Gaining its Appeal Back

Bespoke Investment Group is directing our attention to the greenback, which has been what everybody seemingly wanted to get rid of. Recently, the U.S. Dollar index has been recovering and broke a big downtrend along the way.

Since its close on November 25th, the US Dollar Index is up 3.09%.  This is a pretty big move in the currency market, and it has been an important move because it has broken the long-term downtrend that the Dollar has been in over the last six months.  As shown in the chart below, prior rallies over the last six months have been short lived.  Anytime the index bumped up against the top of its downtrend channel, it quickly reversed and headed lower.  This time around, however, the Dollar was able to break through the top of its downtrend channel, and this resistance will now act as support.

Jim Rogers, who remains a long-term bear in the U.S. Dollar, has taken the opposite side. He does a good interview with Tech Ticker explaining his surprising new trade. Among other things, he expects a major currency crisis in the next year or two, and he is still über-bullish on gold.

“It wouldn’t surprise me at all to see a nice rally in the dollar,” says Jim Rogers.  The legendary investor tells Tech Ticker he has started to accumulate more greenbacks as of late.  Rogers is still negative on the long-term fundamentals for the dollar, noting “the U.S. is the largest debtor nation in the history of the world.”

But “when everybody is on one side of the boat, invariably you should run over to the other side, for awhile,” he tells Aaron in the accompanying video.

Category: Trend Following