Tuesday, February 26, 2008

USD: Over the Cliff?

On the other hand, one explanation for stratospheric commodity prices may that the USD is beginning to plunge again. If you could see over the edge of the cliff, you might be able to see the USD down there somewhere, as it cascades into the global gorge. This seems reminiscent of the Road Runner cartoons that I watched as a boy, when Wile E. Coyote would chase the road runner over a cliff, and we would watch the coyote plunge to the canyon below, with a small puff of dust as he hit bottom. This time, however, it will be no small puff of dust. It will be more like an atomic mushroom cloud!

The USD index is only 20 ticks away from its all-time low, and the EURUSD cross is only a few cents from its all-time high.

USD Index Daily chart
USD Index Intra-Day charts for 2-26-2008