Forecast: Roadmap For Mighty Dollar In 2019

May 9, 2019

100 dollar bills

Will Mighty Dollar Fall?

The answer to the fall of the Dollar is yes. In fact, our specialized cycle analysis presented in this article will show:

  • The US Dollar index (USD) will fall to 70 by 2020, and to 60 by 2025.

Trump’s Wishful Thinking

President Trump would like the Dollar (USD) to fall to increase US trades with other nations. At the same time, he has been touting the rise of the DOW index as the hallmark of his success in managing the US economy. The trillion dollar question is: can he and his economic team lower USD and at the same time continue to increase DOW through various marketing schemes. Our answer is: Trump’s wishful thinking.

In the following section, we analyzed the Dollar Index (USD) data from the Federal Reserve. We also compared USD index with DOW index and Gold prices.

Fourier Cycle Model for USD Dollar

Chart 1 – Fourier Cycle Analysis

Our cycle analysis of the above chart showed:

  • The Monthly Dollar USD will fall to 70 by 2020, and further fall to 60 by 2025.

  • The monthly USD time series (TWEXMMTH) has a very tight fit. The Major Component (Component 1) is 8 years.

  • It must be repeated here that the chart used in technical analysis has accounted all the elements of the market forces, emotions of the traders and the browbeating by Trump,

Comparing USD Dollar with DOW and GOLD

Chart 2 – USD Dollar versus DOW Index

We observed that DOW and USD are highly correlated (+ 0.72). It is unreasonable to expect that USD will go down while DOW rises.

Chart 3 – Comparing USD Dollar with GOLD Price

On the other hand, USD index and Gold prices are negatively correlated. While Gold is true money (with intrinsic value for ages), USD is basket of currencies which the most governments of the world tend to abuse them by printing too much, not in line with the growth of their GDP.

True Nature of Fiat Currencies

Chart 4 – Major Currencies versus Gold

The following chart showed a revealing comparison of major currencies with gold for a long period (1900 – 2018). The depreciation of currencies relative to gold is familiar and a reminder that why gold always serve an anchor for true value. We expect that gold will have a big role in future global monetary reform.

Conclusion

Based on our analysis, the mighty dollar will fall from here onwards…and the relationship among the dollar, DOW and gold will continue to hold. Let us pray for the government and leaders in managing our economy with heavenly wisdom.

We hope to study other global stock markets and their currencies in the future.

“For I am the LORD, I change not; ..” Malachi 3:6

 
 
 
 

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F.T. Dao is a private investor and recently left the corporate world for technical analysis of stock markets.  He holds a PhD degree in physics and has done technical analysis of the market on the side for many years.  He welcomes constructive discussion and can be reached at:  ftdao245@gmail.com  , ftdao245@comcast.net

Gold weakens on global cues and lackustre demand