Yeah I agree, it's a very notable divergence between the sentiment and the price performance. I found it especially interesting that the move from 1.25 to 1.50 was viewed by the bears as confirmation of the bear thesis - when as you point out, it had not even made new lows. You would expect a "collapsing" asset to at least be able to make a new low when bearishness runs rampant. Another interesting factor is how long the bearishness has gone on for, and how consistent it has been. This reminds me of the bearishness on gold and commodities in the late 90s and early 2000s, and the bearishness in the first years of the Euro - the mainstream view was really relentlessly bearish for *years*, not just a few weeks or months. This is the kind of multi-year bearishness you see at the beginning of secular bull markets of 7-10 years or more. Of course these "bottoms" can last for years, so the sentiment alone isn't reason to buy - but this time we now have an uptrend in the dollar as a kind of catalyst, along with clear negative structural fundamentals and newsflow in currencies like the Euro and Pound. If a similar pattern occurs this time, then the more recent lows in the dollar (1.51 Euro) should definitely hold, and we can then expect a multi-year rally that eventually ends with massive dollar bullishness and huge price gains. Short-term the bearishness on the Euro has got a little high, and price has fallen quite far in a short time period, so a pullback of some kind would not surprise me, maybe to 1.40-42. In the longer-term, if this dollar bull market thesis is correct, then we should see a move significantly beyond the 2008 highs of 1.25. That said, I am not sure the Euro is the best currency to short against the dollar. The pound to me looks even more vulnerable over the long-term. I could imagine both pound and euro reaching parity in the next 3-5 years. That would be a 37% gain for Euro shorts, but a 50% gain for pound shorts from current levels.
Well, to be fair the hyperinflationists don't delve into the reasons why the Zimbabwe scenario might be unique. In fact, you could say it's not only unique but unheard of for a country in the situation of the G7 economies. It is after all a very long time since a rich nation experienced hyperinflation. When was the last time? Weimar Germany, a war-ravaged economy managed by a defeated power crippled by foreign-imposed armistice terms? Name one case where a leading world economy experienced hyperinflation. Japan is not the only place that took on high debts and then experienced little inflation. The entire 1930s was like that - and, coincidentally, had people ranting on about inflation risks year after year, while government bonds kept grinding higher, just like 1990s-2000s Japan. Debt increased significantly yet US treasuries were yielding under 2% by the early 40s. There are plenty of past examples to support the deflation/disinflation/stagnation thesis. There are literally *zero* examples to support the hyperinflation thesis. And with US treasuries yielding less than 4%, and inflation nowhere in sight, the current data do not support the hyperinflation thesis either.
There has not been all-pervasive bearishness on stocks for the last 4-5 years. And the stock market is up 70%, whereas the dollar was within 10-20% of its lows from 2005 to 2010, and is still only up about 17% from the bear market low. Those are the main two differences.
I agree from a technical view USD is lining up for a multi year run, fundamentally we seem to be living from year to year right now or maybe 1/2 year to 1/2 year. But would you agree that all things considered for USD to continue current trend over next few years we need stock markets to continue advancing too? What are USD backed by?
History show us that EUR/USD is growing. There will be a time when EU or US (or both) will react to make the EUR grow again
Only because the rest of the fiats suck. US government financials are atrocious and deteriorating daily. It will eventually come to a head.