US Dollar Index 14-Year Chart

by Ashraf Laidi

The US Dollar Index (USDX) is a basket-based measure of the value of the US dollar relative to a basket of six foreign currencies, weighted geometrically relative to the euro (75.6%), yen (13.6%), Pound sterling (11.9%), Canadian dollar (9.1%), Swedish krona (4.2%) and Swiss franc (3.6%).

The USDX began in March 1973 at an opening value of 100.00, on the same year of the demise of the Bretton Woods system of fixed exchange rates. At that time, the USDX opened at 100.000. The index trades on the CE Futures Exchange.

Detailed cyclical analysis related to gold, oil, US and non-US interest rates, US political cycles and foreign currencies is found in chapters 1, 2, 5, 8 and 9 of my book.

Comments By Users

Muira Nairobi, Kenya

2009.01.02

Hi Ashraf
My analysis was based on a daily wave count,weekly also gives a nice picture but i like daily for a few details. I believe it has finished correcting with 77 level as support and is in the early stages of the next 5 wave up. Of course with the weekly count the bigger picture is that its doing an A-B-C with B having retraced upto 61.8% of A which is a very key level and its either complete or doing its final touches.
Regards

Ashraf Laidi London, United Kingdom

2008.12.29

Muira & Joseph: thanks for your posts. MUIRA, are you talking about a weekly Elliot count? JOSEPH: Yes, $1.4650 is a solid resistance that once tested is likely to send euro back towards $1.3200s. PPP theory in forex takes time to develop (about 5-7) years. Just because ECB interest rates are not at zero% does not mean it is behind the curve. Let us not forget about the depth and speed of the break US economic growth and market/household wealth, which continues to prove a real surprise for Federal Reserve officials up to this day. In April 2007, Bernanke said US housing is primarily limited to subprime (defaults soared in May). In June 2007 he and his colleagues still deemed inflation as the real danger (they slashed rates in August). In July 2008, they had the market believe rates were going up in September 2008. Do you see the pattern?

joseph Beirut, Lebanon

2008.12.29

Dear Ashraf,

I always follow your appearances on Tv together with your comments on this site.
If you take the PPP of the euro it is overvalued by 15%.
Also as the MA50 is lower than MA1OO and lower than MA200 meaning that yet the trend is for euro/dollar down.
If euro will reach again the 1.4650 again don't you think that it will correct sharply lower after given all bad fundamentals of euro area and ECB policy behind the curve?

Regards Joseph
e-mail : mehold@dm.net.lb

Muira Nairobi, Kenya

2008.12.18

Hi Ashraf,
I have been reading your articles and they are very helpful, they help me think outside the box. I have been studying Elliot wave which I'm sure your well aware of, and possibly what its saying about to the USD index and correct me if I am wrong is that the resent drop in the dollar is very short term. Its half way a zigzag pattern (5-3-5) and once its through with the A-B-C correction down up to somewhere around 76, we are going to see the final 5 wave up which should mature at the end of Q1 2009. Then from there we see the beginning of US dollar weaknesses like never before.
Regards
Muira

Ashraf Laidi New York, United States

2008.11.23

Hi Slick,

As I said on this site before, the next phase of major USD selling will emerge when equity market volatility abates and global demand creation gradually emerges to the benefit of oil. All these negatives you address are valid, but will not trigger dollar selling as long as stocks remain under pressure. One possible exception is for an e event risk such as i) Automakers are allowed to go bakrupt ii) Citigroup failes to obtain a lifeline. But i remain in favor of my best long term trade and that is long gold.

Ashraf

Slick Willy New York, United States

2008.11.22

Thank you for the chart. Will the USD tank because of potential bail outs?
Are we not the most vulnerable to financial crisis because of our indebtedness re US treasury, corps. and individuals? What happens when OPEC goes to euros? or central banks have to protect their own currency and lose their appetite for treasuries, given our auctions for 20+B 10Xmonth?

Ashraf Laidi New York, United States

2008.11.18

Hi Jerome, the low may be reached at about $1.45, but i do see a year-end rally in cable to as high $1.60. Prolonged signs of economic damage in the UK and the latest signs of tumbling inflation open the door for interest rates to drop as low 2.00%. Also look at the GBP trade weighted index in the home page. it shows we may be nearing the low. Let's see.
Ashraf

Jerome Cologne, Germany

2008.11.18

Hallo Ashraf,
I like your homepage, its very good and gives much insight.
Im only a beginner in studying the markets and I hava a question:
Youre price target in GBPUSD of 1,47 $ has been reached last week, but I pressume we are not done yet? What do you think, it could fall further?
Have you any thoughts on the Pair EURJPY?
Best regard
Jerome

Ashraf Laidi New York, United States

2008.11.11

Hi Hassan,

Much of the action in GBPUSD depends on these 2 main factors ; i) further BoE rate cuts; ii) further declines in global equities. As loong as one of these factors is present (both will be present for some time), GBPUSD may drop to as low as $1.47 sometime in Q1 2009.

Ashraf

Hassan London, United Kingdom

2008.11.11

Hi Dr Ashraf

Do you think that the GBP/USD pair has reached a bottom or it has to drop further down, before a turn around, and what do think this bottom will be?

Regards
Hassan

francis GuangZhou, China

2008.11.04

Hi Ashraf

Splendid analysis, that mean's if i want to sell AUD/USD Whether is the Relative

Currency Combination which level as the safe side or do you have any Suggestion.

Francis

Ashraf Laidi New York, United States

2008.11.04

Francis,
very good chance gold will retest $650 before December. I expect notable gold weakness /dollar strength in November/December, before reversal in January.

Ashraf

francis GuangZhou, China

2008.11.02

Hi Ashraf

Thanks, and what about gold? i see the gold during this day still on 775-680 level

Whether Has the opportunity test 650 before In December?

Francis

Ashraf Laidi New York, United States

2008.11.02

Hi Francis,

Yes, USDX likely to make temporary pullback towards 85 before revisiting 89 and 90, and even 93.

Brendan Singapore

2008.11.02

Hi Ashraf,

I had already placed order for your book at Amazon.com.
Look forward to reading it.

Regards
Brendan

http://www.forexandbinary.com/

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