Outlook For the U.S. Dollar in 2011

I think the U.S Dollar looks like one sick puppy! Sure it’s not as bad as the Euro, but it’s likely that our debt will hit 100% of GDP this year and I see no end to QEs. The FED now owns more Treasuries than any country in the world (isn’t that monetization?) Sheldon Filgerat the Hiuffington Post thinks so. He wrote in August, 2010:

In a step that will be one of the markers on the road to economic and financial catastrophe, the Federal Open Market Committee (otherwise known as the FOMC) of the Federal Reserve, made a bombshell policy decision on August 10, 2010, one fraught with dangerous long-term consequences for the American and global economy.

Why is 100% of GDP so important? That seems to be the level of no return. Once a government hits that level interest payments eat you alive.

Technically, the USD appears to be rolling over after running into resistance at its 40 week moving average. I expect a challenge, that will fail, of the 79 level on the index and then a test of the lows of november of 2009 and 2010 or the 75 area. (see chart)

Tags: Predictions for 2011

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