The Dollar has recovered and recharged from the recent selling pressure and is again poised to continue its Cycle decline. Because the 3rd Daily Cycle has progressed to Day 16, we should expect to see only 4 to 8 days of sharper declines into an eventual Daily Cycle Low.
The important level to watch out for with the coming DCL is the 78.60 line. This has marked the last two major Investor Cycle lows and the Dollar has defended this area (see chart below) a number of times already. Once this area is taken out then the Dollar 3 Year Cycle would have officially topped and the longer term momentum should shift firmly to the bearish side. This would allow the coming Investor Cycles to form in Left Translated Cycles which will serve to accelerate the declines.
From a pure Cycles perspective it looks like 2013 will be a picture perfect 2 or 3 declining Investor Cycles event. The 3 Year Cycle should be in decline with the next major Dollar low not due until 2014.
From a macro-economic standpoint I see a world economy contracting and rapidly deleveraging. With an elevated possibility of additional financial shocks or calamities, the coming year should be bullish for the Dollar. If the Dollar is going to surprise us in 2013, then we should expect this line (78.60) to hold or only marginally break before we see yet another surprise rally begin to unfold.
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