US Dollar ETF Nearing Critical Support

10/04/2010 10:30 am EST

Focus: FOREX

Although the majority of investors have a bearish outlook on the economy, we have seen a large price appreciation in equities and precious metals. This is largely due to the fact that the US dollar is quickly getting devalued. Simply put, as the dollar drops, it helps boost commodities and stock prices.

There is also an interesting technical chart for the PowerShares US Dollar Index Bullish Fund (UUP):


Click to Enlarge

While a rising stock market is great to see, at some point, the dollar will become so cheap that it will start to have a very negative affect on the US economy, commodities, and stocks. Being from Canada, it has always been more expensive to take holidays in the United States, and I remember paying $1.50-$1.70 Canadian for every greenback. But now the dollar is almost at par, making holidays very affordable. The big question/concern is when will they ease off on the printing? At the rate they are printing, the greenback will be at par with the peso…well, not that extreme, but you get the point!

By Chris Vermeulen of TheOilAndGoldGuy.com

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