The American dollar has fallen by more than 10% against a basket of currencies since January, when we last updated our patty-purchasing index https://t.co/s24zXIeyt9 ...

Long-term Trend Analysis Framework - Structural driving factors include interest rate differentials, economic growth differences, and purchasing power parity (PPP) [1] - The Australian dollar to US dollar (AUD/USD) fell by 40% from 2011 to 2015 due to the Reserve Bank of Australia's continuous interest rate cuts [1] - OECD leading indicators show that when the US PMI exceeds the Eurozone by 3 percentage points, EUR/USD depreciates by an average of 5% annually [1] - The Taylor rule model can predict policy interest rate paths [1] - The US dollar has long-term deviations from PPP of about 15%, but it tends to revert to the mean over a 10-year cycle [1] Cyclical Analysis Models - The Kitchin cycle (3-4 years) reflects inventory adjustments affecting short-term fluctuations in commodity currencies [2] - The Juglar cycle (8-10 years) is driven by capital expenditure cycles impacting currency pairs like AUD/JPY [2] - The Kuznets cycle (15-25 years) shows a linkage between real estate cycles and currencies like CAD/CHF [2] - During the Federal Reserve's tightening cycle, the US dollar appreciated by an average of 12% from 1994 to 2000 [2] Quantitative Analysis Tools - Trend identification can be achieved through the crossover of 150-day and 300-day EMAs [3] - The ADX indicator confirms trend strength, with values above 25 indicating strong trends [3] - The Hurst exponent is used to assess trend persistence, with values greater than 0.5 indicating trend continuation [3] Practical Strategy Development - In an expansion phase, strategies include going long on commodity currencies and managing positions using the Kelly formula [5] - In a recession phase, strategies involve going long on USD/JPY and employing volatility strategies [5] Cutting-edge Research Areas - The impact of carbon border taxes on euro pricing and the correlation between the El Niño index and AUD/BRL are being studied [6] - The interaction between stablecoin liquidity and the offshore dollar market is a focus area [6] - Development of a Geopolitical Risk Index (GPR) to analyze dynamic relationships with Middle Eastern currencies [6] Classic Case Reviews - The 1992 British pound crisis was influenced by rising German interest rates while the UK maintained its exchange rate mechanism [7] - The 2015 Swiss franc decoupling was a result of contradictions between the Swiss National Bank's balance sheet expansion and its exchange rate policy [7] - The 2020 pandemic caused a liquidity crisis in the dollar market, leading to a sudden collapse of carry trades [7] Summary - Effective long-term cycle analysis requires a multi-layered framework that includes macro factors, market structure, and behavioral finance [8] - A mixed strategy of 70% trend following and 30% cycle adjustment is recommended, with a focus on monitoring the US 10-year Treasury volatility index (MOVE) and global forex liquidity indicators (FXLI) as leading indicators [8] - Attention should be given to the global debt cycle, which has reached a historical peak of 327% of global GDP, impacting currency valuation systems [8]