US Dollar Could Be Nearing Endgame

It now looks as if the expected Dollar DCL has played out with the recent (Monday) Day 27 Low.  There was some positive (in relative term) news out of Europe with the announcement of yet another Greek bailout adjustment that the market was expecting to be bullish for the Euro.
Instead it was the Euro that fell upon the announcement, a clear indication that the news had already been bought the previous session.  These “sell the news” events are often found during key Cycle (pivots) lows.

The rise in the early portion of this now 3rd Daily Cycle has provided some considerable head-winds for risk markets.  As I had outlined within the weekend report, a DCL was expected, but what to expect out of the coming Daily Cycle is still a relative mystery.  Odds favor that we see around 7-10 days of strength out of the Cycle and at least a meaningful effort to get back up towards the prior Cycle High of 81.45.
But I have a sneaking suspicion that the Investor Cycle is tiring and could well have topped with the prior Daily Cycle.  This Investor Cycle is now 11 weeks in and passing its typical half way mark, but yet it has failed to make any significant gains.  Ordinarily we could simply excuse any Investor Cycle for being flat, but in this case the Investor Cycle happens to fall in the timing band where a significant 3 Year Cycle Top may occur.  So in isolation this Cycle may be simply “catching its breath”, but from the dominant Cycle perspective, it is signaling that a significant decline is probably unfolding.  The proof will be in this coming 3^rd Daily Cycle because beyond this Daily Cycle it will be just too late for the Dollar to mount any type of surge.

As it appears the Dollar (chart above) will not make new IC highs (above July 2012 high) it will form its first lower Investor Cycle high of this 3 year Cycle.  That in itself is not “an endgame”, but if the coming Dollar ICL (in 6-12 weeks’ time) falls below the September low (78.60), that will spell big trouble.  At that point the 3 Year Cycle would have failed and we will have the first set of lower highs and lower lows.  That type of action is what defines a Cycle in decline.