Eoin Treacy's view The received wisdom is that the US Dollar is a weak currency. There have been heated arguments among investors for a number of years about the likelihood of a Dollar crisis. We have never been supportive of the crisis idea. However, there has been no denying that the US Dollar has declined considerably against a wide range of currencies over the last decade, not least some of those in Asia and Latin America. The USA's deficits, unfunded future liabilities and rampant money supply increases have all contributed to deteriorating investor sentiment towards the currency.

However, the US Dollar also reflects the stability of the world's largest most liquid capital market and continues to attract adherents during times of financial stress. Over the last three years it has tended to hold onto more of its strength on pullbacks than has been the case over the preceding decade.

One of the defining characteristics of the 1990s was that not only did the USA have one of the most vibrant stock markets but also one of the strongest currencies. This was powerfully attractive for foreign investors in US assets. Between 2002 and 2008 the Dollar Index dropped by over 40% and the trend reversed. Asian currencies in particular but also the Brazilian Real outperformed from 2000 until 2008 which made investing outside of the US Dollar more attractive.

The Dollar Index is weighted Euro (57.6%), Yen (13.6%), Pound (11.9%), Canadian Dollar (9.1%) Swedish Krona (4.2%) and Swiss Franc (3.6%). It has been largely rangebound for the last four years and currently appears more likely than not to rally towards the upper side of this lengthy congestion area.

The Asian Dollar Index is weighted Chinese Renminbi (37.9%), Korean Won (13.69%), Singapore Dollar (10.27%), Hong Kong Dollar (9.22%), Indian Rupee (7.52%), Taiwan Dollar (7.04%), Thai Baht (4.93%), Malaysian Ringgit (4.53%), Indonesian Rupiah (3%) and Philippine Peso (1.92%). It bottomed in 1998 and trended consistently higher from 2001 until 2008. It experienced a deep pullback during the credit crisis and rallied impressively subsequently. The Index hit a medium-term peak near 120 in July 2011, dropped below the 200-day M and has been ranging mostly below it since. In the absence of a sustained move above 118, this can be construed as a first step below a type-2 top formation.

The Latin America Dollar Index is weighted Brazilian Real (33%), Mexican Peso (33%), Colombia Peso (12%), Chilean Peso (7%), Argentine Peso (10%) and Peruvian Sol (5%). It also trended consistently between 2003 and 2008 but collapsed in 2008 and subsequently failed to surmount its pre-crisis peak. The Index completed a type-2 top in August 2011 and has been ranging below the 200-day MA since. It has dropped to test the lower side of the range over the last few months and while somewhat oversold in the short-term a clear upward dynamic would be required to suggest anything other than temporary support in this area.

I clicked through all the US Dollar spot rates in the Chart Library today. The US Dollar is not making a new low against any currency. A number of weaker currencies are hitting new all-time lows against the Dollar. The Dollar has broken upwards against the Brazilian Real and exhibits a distinctly bullish tone against the Mexican Peso, Croatian Kuna, Czech Koruna, Hungarian Forint, Israeli Shekel, Latvian Lats, Turkish Lira, Polish Zloty, Romanian Leu, Swedish Krona, Slovakian Koruna, Russian Ruble and South African Rand,

The US Dollar has posted a higher reaction low against comparatively strong currencies such as the Singapore Dollar, Australian Dollar, New Zealand Dollar and Korean Won.

The particular weakness of a host of European currencies relative to the US Dollar is at least in part due to the fallout from the Eurozone's crisis and the effect it has had on the availability of credit continent wide. A number of Asian currencies are still among the strongest versus the Dollar but clear trend deterioration would be required to question potential for additional US Dollar strength against a broad basket of currencies.