FxWirePro: Dollar reaches second target in longest monthly decline since 2011

In April this year, in an article named, “FxWirePro: Dollar likely to decline by more than 5 percent” available at http://www.econotimes.com/FxWirePro-Dollar-likely-to-decline-by-more-than-5-percent-630175  , we forecasted that the dollar index, which is the value of the dollar against a basket of six currencies would decline more than 5 percent from the then current level of 100.5 to reach 95 area.

We cited two major reasons behind the forecast,

• “The dollar faced siege from two fronts; one being the uncertainties surrounding US policies which include not only the uncertainties with regard to policies under the new administration but also the ability of the new administration to pass its agendas successfully through the House of Representatives and the Senate.”
• “The second one is more global in nature and we at FxWirePro have been discussing this over the past year or so. While the US Federal reserve has turned out to be quite hawkish in 2017, it is well behind the curve when compared to its 2014 forecast that triggered the impressive 2014 summer dollar rally. Despite falling behind Fed’s own forecast, the dollar could find support from the dovish actions of other central banks namely the European Central Bank (ECB) and the Bank of Japan (BoJ). Now, those central banks are considering a reversal in their monetary policies, which is not likely to bear well for the dollar.”

Since then, these two above fundamentals which are working against the dollar have not abated but intensified. The Washington is suffering an internal battle as people working within the administration but against President Trump and the media continue to undermine the current administration with damaging leaks. The central banks around the world have also intensified their hawkish rhetoric.

In a subsequent article published in late May, named, “FxWirePro Call Review: Dollar index target extended from 95 to 93”, available at http://www.econotimes.com/FxWirePro-Call-Review-Dollar-index-target-extended-from-95-to-93-723907 , we recommended,

“Since our article in April, the dollar index has slid further and we expect the trend to continue even if its finds support around 95 area. We now expect the dollar index to slide by another 4 percent (approx.) from the current level of 96.9 to 93 area.”

In another subsequent article, published in July, we extended the target from 93 to 91.5, as the fundamentals and sell offs intensified further.

Now, the dollar has reached our second target at 93 as the chaos in the White House have led to the ousting of President Trump’s second communications chief, Mr. Anthony Scarramucci. The dollar index is currently trading at 92.85, down for a fifth consecutive month. The last time the dollar was down for five months was back in 2011 when it declined 10.25 percent to 72.93. So far, in the past five months, it has declined by 8.4 percent.