A few more points for the Greenback

Here are three more reasons why I like the Dollar here (I am really trying to find an opposite point of view, but I can't yet...still searching):

Reason One:

In my last post I mentioned that Matt Nesto (CNBC) pointed out that the Sterling/Greenback is trading higher today then it was the day it plummeted on news that the UK gov announced it was going to buy $75 Billion Pounds of their own paper. Well, check out this quote from Marc Chandler today:

"The dollar's decline clearly accelerated when the Federal Reserve announced that it would buy another $750 billion of mortgage-backed securities, another $100 billion of agency bonds and, for the first time, $300 billion of Treasuries. Other countries that have announced quantitative easing programs, such as the U.K., Japan and Switzerland, have seen their currencies weaken as interest rates fall.

Yet in the larger picture, many seem to be exaggerating the negative dollar implications of Fed's decision. First, while inflation expectations of monetizing the U.S. debt are a legitimate concern, dis-inflationary if not deflationary forces seem stronger than inflation, not only for this year but next year as well. Second, using the five-year/five-year forward rate, which both the Fed and ECB have cited, shows that even after the adjustment following the FOMC meeting, expected" European inflation is higher than expected U.S. inflation."

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Reason Two

In this first chart we have the EUR/US pair coming right up to (a decently long) trendline. No big deal...anything can happen, right? I can't see much fundamentally that would signal a significant breakout of this trendline, but anything can happen (clicking on the charts give you a clearer view):

But look at the next chart...the above chart's trendline starts at the second top of the double top (below.) BUT the second chart's trendline starts at the first top of the double top...and look what happened on the 22 or 23 September of last year...it seems to have bounced again. It could be a reach, but I don't think so:

Lastly, I read Brian Dolan, the fundamental analyst from time to time (excellent explanation here (PDF)...and he suggests that the Euro could be in trouble. Remember...Europe hasn't announced any quantitative easing yet...whereas Switzerland, the UK and the U.S. have.

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Reason Three
(boy, I'll look silly if this pair goes north!)

Here is a chart from my trend-determining software which shows the spot price of the Dollar. As you can see, the currency held the gap created right before Christmas and finished higher: