After having trended higher since mid-2011, the U.S. Dollar IndexDXY –0.30% is on the verge of declining and beginning an important correction.
The index’s monthly closing chart shows that the dollar stalled again at a 33-year trendline. This trendline has proven to be formidable resistance many times since 1987.
The one exception occurred in 1999, when it was hurdled decisively. The Dollar Index advanced quickly, but that advance proved to be terminal—leading to a vicious bear market. On the way down, once the index pierced that trendline, the decline accelerated—with the dollar losing 20% in less than two years. But by the time the bear market ended in 2009, the index had lost 40%.
The index’s monthly closing chart shows that the dollar stalled again at a 33-year trendline. This trendline has proven to be formidable resistance many times since 1987.
The one exception occurred in 1999, when it was hurdled decisively. The Dollar Index advanced quickly, but that advance proved to be terminal—leading to a vicious bear market. On the way down, once the index pierced that trendline, the decline accelerated—with the dollar losing 20% in less than two years. But by the time the bear market ended in 2009, the index had lost 40%.