The USD has already approached a critical juncture in its bull market. The wave pattern from the 1985 all time high still looks bearish. And the pattern from the secondary 2001 high could be counted as long term bearish as well. Until 92.63 the 2005 high, is significantly exceeded, there is a potential for a failure and the end of the recent one year bull market. When one reviews the OEW patterns from 1998 we observe a three year decline then a one year rally, followed by another three year decline and one year rally. The two three year declines contained exactly the same wave structure, a quadruple zigzag. (see page 11, 6th chart down in the link below). This is why is was not too difficult to identify the March 2008 bottom in the USD. Now we are again at a similar crossroads, as the one year patterns also contain the exact same wave structure of their own, (same page same chart). In fact, negative divergences formed at the recent high, just like in 2005, and the USD has already started downtrending. Finally the USD started to selloff a couple of weeks after the last G-20 meeting, (see page 11, 5th chart down). The next G-20 meeting is scheduled for April 2nd.
There has also been some talk that the IMF will begin to play a bigger role in international monetary affairs. Also, that their currency – Special Drawing Rights – may take the place of the USD as the worlds reserve currency. Plans are often made and then modified as events unfold. OEW, however, suggests the USD is quickly approaching a critical juncture in its wave pattern. Plus the actions by the FED/Treasury over the past two years have certainly dramatically increased the number of dollars in circulation worldwide.
Based upon the wave structure already noted on the charts. Plus, the noise coming out of the pre-G 20 meeting, and rhetoric leading up to the April 2nd meeting. It does appear the USD may have ended its bull market. We placed an X at the recent high to suggest that another three year ABC downleg is likely to follow. This could have long term implications on Consumer purchasing power in the US, Currencies worldwide, Gold, and eventually Bonds.