Take a look at the 7 year chart of the U.S. dollar vs the Euro below.  The dollar saw a triple top in the 1.15 range between late 2000 and early 2002, and has gone steadily down ever since.  But that decline may be on the verge of a significant and long lasting recovery.   Are you prepared for the dollar recovery?


There are many reasons why a currency can become weak over time, and the United States has had significant factors justifying a decline in the dolalr, including:

  • Prolonged and costly wars in Afghanistan and Iraq
  • Fiscal recklessness and runaway deficit spending
  • Large debt to GDP ratios
  • Huge trade imbalance - trade deficit
  • Low federal funds interest rates (currently just 2%)

While all of these factors have indeed impacted the dollar over the last 7 years, it is important to realize that currency analysis works in pairs.  It’s not enough to justify a weakened dollar on its own merit.  The dollar weakens or strengthens only in relation to other currencies.  And often times the extent of a weakening currency (dollar) can be overdone due to perceived values. The United States currency decline may have been overextended due to several factors including:

  • United States budget and debt statistics are freely available to anyone around the world, making it convenient to target United States fiscal recklessness and ignore other currency problems.
  • By many accounts the housing weakness and bank failures started in the United States
  • Multiple dollar doomsday books available such as the Demise of the Dollar, and The Collapse of the Dollar.

But eventually the currency traders will realize that for every problem pointing to a dollar decline, there are just as many or more pointing to an even greater chance of a euro and pound collapse.  Consider these facts:

If you believe that despite the U.S. fiscal problems, the dollar will still lead a prolonged recovery against the euro, pound and other currencies, then here are a few ways to play it: