The dollar has been one of the weaker currencies amongst the major industrial trading partners. Thanks to coordinated intervention, the Japanese yen has managed to take over the mantle from the dollar in the race to the bottom.
The weekly chart below shows that the dollar’s rally against the yen stopped cold as it approached the top of the short-lived rally after September’s unilateral intervention on behalf of the yen. However, it appears a consolidation pattern is taking shape that could form the basis for a bottom.
Source: dailyfx.com charts
Despite this potential bottom, the dollar index overall looks like it is trying to establish a bottomless pit. The downtrend that began last summer remains in place, and I expect it to continue…right along with the yen. There of course could be the obligatory relief rally at the 2010 lows around 74.
*Chart created using TeleChart:
Be careful out there!
Full disclosure: long USD/JPY