Dollar is oversold, and it should start to come down soon. Markets normally move with sentiments and emontions. US economy is going down and $ is moving up, $ rally is not backed by any economic fundamentals. As usual analysts are trying to explain this move with varied explanations. Personally, I see a reaction to the elections.
Whenever something new is coming on its way, all get hopeful. Markets are hopeful about obama's anti-war and boost the economy speeches. But once they come to understand that, he is pretty much an ordinary successor of Bush... with no magic wand to repair the damaged and badly bruised US economy.... All hopes will go into garbage bin, and money will move out of $ and into alternative investments (Euro, gold, real estate, foreign countries, etc...).
A picture is worth thousand words:
This huge bailout and $ supply will take a toll on the price of $ sooner or later, and $ will see the sharpest drop in its value. Inflation will skyrocket in all the countries pegged with $.
Elections and Paulson's bailout of Fannie and Freddie has caused a temporary rally in the US$ market, but it has serious and fundamental flaws that will play into market sentiments soon.
If anybody interested in more detailed information read the following article
Hank Paulson's Fannie Gamble - WSJ.com
Ron Paul is right on the money too:
YouTube - Ron Paul on the Housing Bill