It may seem extreme, but the October 12 headline on DrudgeReport.com (one of the world's most popular news websites) "Kiss the Dollar Goodbye," complete with a picture of a smooching President Obama, is a fair reflection of the sentiment toward the buck.
Based on a recent poll, bullishness towards the U.S. dollar is still low (17%) and has been as low as 3% on previous occasions. This reminds me of the sentiment towards crude oil in December 1998, when it traded just above $10/barrel. At that time prices had already fallen by half, and the almost universal opinion was that oil would go below $10/barrel. Price had to drop only 36 cents to get there -- but it never happened.
The headline above plainly states what many business articles are saying. There are also rumors that the dollar will be replaced as the pricing currency -- another example of extreme bearish sentiment. We've seen similar rumors in the past when negative sentiment towards the dollar would reach an extreme: in late 2004, for example.
All this bearishness continues to fit the Elliott wave pattern we see in the U.S. Dollar Index charts: Potentially completed five waves down since March 2009.
All that lacks so far is the actual turn, which would be signaled with a dollar rally in five waves.
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