Now that EURUSD has broken a primary true trendline and heads to next resistance at 1.5, the dollar collapse is in the news. From a sentiment point of view the fall in dollar is nearly 12 month old and EUR has strengthened 25% against dollar during this period. This is a good time for sentiment to get bearish on dollar. If we go back in Jun 2010, it was EUR collapse that was in the news. And street talk was about EUR Dollar Parity. Sentiment rolls over with time. Now 1.5 is a key resistance for EURUSD and respective levels should also mark a sentiment extreme against Dollar. Above this the EURUSD price structure from Jun 2010 low does not seem to be a five wave trended structure. It looks more like a 3 wave corrective counter trend.

From a cycle point of view the weekly UUP Dollar ETF Jiseki cycles (red, blue, grey) are bottoming and suggesting that Dollar is more likely to bottom against global currencies than otherwise. Whether it take a few weeks or another quarter more is hard to say now. But when the dollar will reverse, the move should be secular and a larger one than what we have seen on 12 month EUR strengthening. Dollar could strengthen for a few years. What it means for European Union and what it means for the world at large, is something sentiment can not understand or visualize now. Sentiment like everything follows time. When the cycle is up, sentiment is up and vice versa. After 1.5 EURUSD we review.

Mukul Pal, CMT, Orpheus Capitals, Global Alternative Research