FOR investors who believe in the old adage the 'trend is your friend' there should be no doubt in their minds as to what direction the dollar is headed.
Against the yen, the chart looks more like the trajectory of a skydiver than the representation of the relationship between two of the world's premier currencies.
Both the Japanese and United States authorities are in a quandary about how to halt the dollar's plunge.
John Laware, a Federal Reserve board governor, when asked about what might turn the dollar around said: 'I think fiscal policy is probably the answer.' His reply reinforces the opinion that the dollar's weakness is much more to do with structural issues like trade deficits than changes in interest rates.
On weighing up the economic implications of a falling dollar, it is thought Japan could be the biggest loser as the country's nascent economic recovery could stall.
The Japanese authorities keep saying they will introduce measures to stop the yen's rise.
However, the two main short-term weapons at their disposal, interest rates and market intervention, are likely to be as effective as using a plaster to stem the flow of blood from a burst artery, given the current market conditions.
