Change in direction for the dollar

The trend has changed and the dollar is now in a downward slope compared to the euro. For the first time since the dollars upward move, we now have the euro hitting higher highs and higher lows.

Even though we have this confirmation of a change in the trend, I am still of the opinion that the euro will in the future end up at much lower levels against the dollar. The timing of this outcome however is another matter altogether.

Theoretically speaking commodities and gold should do well, however both are so outrageously overpriced that I dare not even consider the notion.

Assuming that the fed does not overdo it with the printing press, stocks, especially manufacturing stocks (most are priced for scrap), should do just fine and should more than increase in value compared to the loss in the value of the dollar.

Way too much dollar negativity makes me want to buy dollars

With all the money printing by the Fed and with the $300 billion monetization process in play, it’s only natural that the dollar has slid lower against the Euro.

But does anyone realize that the asset purchases needed by the ECB will be more than what we are now witnessing by the FED?

The German banking system is 100% broke, Ireland is near broke, Spain is on the way and not to mention Greece.

I don’t know when, but mark my word, the ECB will be buying (or financing might be a better word) the national debt of Greece and many other countries by this time next year – and these purchases will not be sterilized!

On a purchasing power basis, the dollar is still cheap, although fund flows at the moment (due to FED money printing) are not in favor of the dollar.

Be ready to go long EURUSD when the FED finishes its $300 billion treasury purchases program. The way I see it, the trend will reverse when the ECB starts doing the same thing.

By the way, the announcement by the ECB that it will purchase 60 billion euros in covered bonds is only the down payment of a down payment.