US Dollar why so strong?

USD Index since the May 1st, 2012

The chart above shows the startling strength of the US Dollar, rising some 6.20% since May 1st 2012. Given the dreadful state current of the American economy, the excessive debt levels and negative outlook, why is the US Dollar so strong? Two words: capital flight, or money fleeing weaker nations and moving into the US Dollar. Money from Greece and Spain have long been noted, but now we’re seeing broad dumping of Euros and movement of money into US Dollars, but here is the big one: wealthy Chinese.

How much stronger could the US Dollar get? Anyone’s guess, but the chart below shows performance of the Dollar since the onset of the credit crunch. Another 7% or more to the upside could be easily achievable.

USD Index since the July, 2007 Credit Crunch

USD Index since the July, 2007 Credit Crunch

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