US dollar loses its lustre, but for how long will it stay dim?

The Dollar Index, a weighted average of six main currencies against the US greenback, has lost the 93.00 level. The question remains for how long? The US Dollar Index sunk further, dipping below 93.00 to more than a two-year low as the euro rose above $1.1800, a two-year high.

Meanwhile, US stocks and gold continued to advance. We think the dollar can continue to trend lower on a sustained basis in the near-long term. That said, the USD is still about 10 percent overvalued, and is probably a drag on US global competitiveness. Net long euro positions, or bets on a stronger euro, are as big as they were just before EURUSD peaked in 2018. This echoes the dollar index position, referring to the net dollar short position or bets against the currency in the latest CFTC data.