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In NIA’s top 10 predictions for 2010 article that was released on December 21′st, NIA said the U.S. dollar was overdue for a short term bounce from a technical standpoint because more people had become bearish on the dollar than ever before. NIA was right. The U.S. dollar index rallied in early 2010 from 78 up to a high of 82. This is because the U.S. dollar index only compares the U.S. dollar to other fiat currencies and it is heavily weighted against the Euro.
There is currently a major financial crisis in Greece which has given speculators on wallstreet an excuse to short the euro and prolong the U.S. dollar. Greece has a budget deficit which is over 12% its GDP and many people believe a collapse of Greece could take down the Euro. Everyone who was bearish on the U.S. dollar in late 2009 is now pessimistic about the Euro. NIA believes those that are short the Euro will soon have to reverse their trades, which could lead to the Euro bouncing along with the U.S. dollar crashi
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