Enterprising Investor Forum

Dollar Resumes Slide Thursday, December 18, 2008

After a short period of strength in the midst of the whole de-leveraging story, the US Dollar has resumed weakness as most high profile investors have predicted for quite some time (i.e. Buffet, Rogers, Soros, etc..).

The actual graph is quite scary and what is surprising most of us is the speed at which this is happening – hereafter the latest 1 month EUR.USD chart :

It is currently on the way to breaking the 200 day moving average of 1,4712 and most commentators believe it will shortly return to the levels we saw this summer: 1,60 range.

What does this mean for the markets? Well, this is quite alarming as it would probably lead to a grid-lock situation and probably bring the 650 level back into play for the S&P – or at least, sub 700 area.

As our regular readers know, we are value investors and not market timers or commodity or forex specialists but the current climate feels very fragile and we would advise caution before entering the market. We would tend to adopt a wait and see strategy or place BUY LIMIT orders at the 52-Week-Low level until we have a better view of the current economic climate, issues & scandals.