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Currencies , Investing

Will “King Dollar” Reign Supreme – Or, “Abdicate” the Throne?

This U.S. dollar sentiment measure reaches its “lowest level in 12½ years”

by Bob Stokes
Updated: January 28, 2021

Many investors and financial publications have been expressing a lack of confidence in the prospects for a price rise in the U.S. dollar.

One attention-grabbing headline from the Wall Street Journal said (Dec. 30):

King Dollar Is Abdicating and That's OK

The Fed's stance means the greenback's weakness is likely to continue, but that isn't a disaster for investors who position themselves correctly

The article goes on to say that a weaker dollar is not unwelcome news to investors because a "weaker dollar often means higher asset prices on everything."

Many hedge fund managers are among the investors who are giving the greenback a thumbs down. These managers are also known as large speculators.

Here's more insight from our January Elliott Wave Financial Forecast:


The lower graph on the weekly chart shows the net long/short position in U.S. Dollar Index futures held by Large Speculators. This cohort of traders are typically trend-followers that become more bullish as the trend rises and more bearish as the trend declines. Last week they were net short 14,875 contracts, which is the largest net short position since March 2011, which was six weeks before a major low at 72.696 on May 4, 2011. The top graph shows Market Vane's Bullish Consensus, a sentiment measure that tracks the recommendations of market analysts, commodity trading advisors and brokerage house analysts. This week, the Bullish Consensus on the U.S. dollar declined to 27, which is the lowest level in 12½ years, since July 2008. At the time, the dollar was at the forefront of a strong rally.

History shows that large speculators are often positioned on the wrong side at key turns. They are just as much a part of the "crowd" as most everyone else.

Right now, investors would do well to separate themselves from the crowd and focus on the Elliott wave pattern of the U.S. Dollar Index.

You see, the Elliott wave model helps you to identify turns in time to act.

Get the insights you need by following the link below.

Get an Eye-Opening Update on the “Dream-State” of the Current “Stock Mania”

The January Elliott Wave Financial Forecast includes the phrase "dream-state" -- and you'll learn exactly why it perfectly describes the public's euphoria over the stock market, as you read the issue for yourself.

Chart after chart -- and riveting paragraph after paragraph -- will put you in a position to see the likely start of one of the most treacherous financial episodes in modern history -- if not all time.

See it all for yourself -- so, you can prepare yourself.

Following the link below gets you started.

A “Freight Train of Grains” Didn’t Cause Soybeans’ Recent Price Crash. So… What Did?

"Crash," "sink," "runaway freight train," and ever-lowering "limbo pole" are a few of the phrases used to describe the May selloff in grains, particularly soybeans. But before you blame the "bombshell" May 12 USDA supply/demand report for the slide, you'll want to read this first.

Commercial Real Estate: Prepare for a Potential Global Calamity

A lot of the commercial real estate market is faced with a decline in liquidity and falling values. The specter of defaults looms large. In at least one region of the world, there are reminders of the dark days of Q1 2009, as revealed by this chart.

'How people FEEL is how they ACT'

Like all ideas that make you want to slap yourself on the forehead and scream "How didn't I think of that!", the idea behind socionomics is simple: Social mood impels social action. When you know social mood's trend, you can forecast everything from the stock market to culture to politics and more. So, how then do you define the social mood trend? Watch our Head of Global Research touch on that in this video.