The US Dollar Index has collapsed as a result of yesterday's decision by the Federal Reserve to purchase long-term US Treasuries. Although this significantly nullifies the threat of deflation, the Fed's decision greatly enhances their debt load and will significantly increase the budget deficit. The Greenback's weakness is now approaching a cluster of fibonacci retracements in the 82.25-40 region (the 38.2% retracement of the all-time low to the March high & the 61.8% retracement of the December 2008 low to the March high). Further beneath lies the key psychological 200-day MA. Expect weakness to persist while below the falling 10-day MA & a descending trendline in the mid 85 region.
