September 9, 2009 – September has so far been a bad month for the US dollar. From its close on September 1st, the US Dollar Index has declined 2.1%. The following chart is looking increasingly bearish.
The Dollar Index is now at its lowest level this year. Today’s close is the lowest since last September, when the collapse of Lehman Brothers triggered a massive de-leveraging and a mini-flight into dollars. That scramble for dollars ended early this year when the short-term uptrend line on the above chart was decisively broken.
Importantly, the Dollar Index is now below 80 once again, the previous record low until two years ago. It therefore suggests that the temporary retracement back above 80 last year was a false rally, given that it was not sustained.
There is one last point I would like to make about the above chart. The downside momentum in the Dollar Index is building, which suggests that before the end of this year, the Dollar Index could reach its all-time low of 71.33 (set April 22, 2008).