There was a great article by Kathy Lien over at moneyshow.com where she makes the forecast and argument that the US dollar could drop another 5 to 7% and that the Euro could conversely rise another 5 to 7%.
The reason this article is important is because the almost perpetual and persistent advance in the SP500 has derived a lot of it’s energy from a slow and gradual falling dollar. Gold and commodities have also benefitted from this trend especially in the current near term time frame as it appears the gold price is moving into the parabolic stage.
But the main point of the article that I find key is the perspective that currency moves tend to be quite persistent and not that likely to change direction once a firm trend is in place.
She identifies this 5 to 7% range of advance (in the case of the Euro) and 5 to 7% decline in the case of the US Dollar Index and it is interesting to note that those levels correspond to the Euro hitting the resistance level near its previous major high and the US dollar hitting the support level of its all time low.