There is a unique confluence of forces lining up simultaneously in the US dollar now:

  • Commercials have a massive short position in US Dollar Index futures while small speculators have never been longer


  • The US Dollar Index is working on its 7th consecutive up month, the longest streak since 2010 which was coincidentally when the dollar put in a significant top



  • US Dollar sentiment is extremely one sided (bullish), perhaps even more one sided than it was during the summer of 2012 when Barron's printed its famous cover calling for EUR/USD to reach parity which proved to bottom tick the euro and top tick the dollar


Goldman Sachs made a similar, albeit, less public call on EUR/USD this morning (the euro is by far the largest component in the basket of currencies which comprises the US Dollar Index) by stating that the euro could reach parity with the dollar by January 2017 and could fall as low as 90 cents by January 2018


Read also: Intriguing Crossroads in the Euro