The US dollar double bottomed on the year near 7350 on Aug 17 following the US credit downgrade. For all intents and purposes, the dollar set a quadruple bottom at 7350 between June, July and August. Subsequent to US credit downgrade and quadruple bottom near 7350, troubles in Europe have begun to escalate. There will be a vote on Sept 7 to decide the constitutionality of sovereign bailouts in Germany. The Swiss was a safe haven up until the Swiss Natl Bank intervened in its currency on Aug 11 and now again on Tues Sept 6.

Gold caught a safe haven bid as well on the SNB Sept 6 Swiss Franc intervention. The safe have bid drove gold to record highs. However, gold is struggling to keep its safe haven bid today. New highs fouind willing sellers. So, we will take a closer look at gold over the next few weeks to see if gold bulls might be caught long. The suspicion is that if this dollar bid is more than short-covering, then at some point, the gold rally could become risky as risks in Europe escalate driving more capital into the US dollar. For now, please note the US dollar just broke its down trendline from Jan and Jul 2011.

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