The broad depreciation suggests a rebalancing in which nations from China to Chile with the world's fastest growing economies make up a bigger slice of global demand. That may help President Barack Obama meet his goal of doubling U.S. overseas sales by the end of next year even as export growth has slowed annually every year since he took office.

“The dollar is in fact on a trade-weighted, inflation-adjusted basis, near its most competitive levels in over 30 years,” Robert Sinche, the global strategist at Pierpont Securities in Stamford, Connecticut, said in a telephone interview. “Where you want the U.S. to be competitive in the years ahead is in these emerging-market countries, where export potential is pretty significant, as they're growing faster than the developed world.”

Eoin Treacy's view The Dollar Index is by far the most widely used measure of the US Dollar's performance but is so heavily weighted by the Euro and the Yen that it offers an incomplete picture. In the past we have highlighted the Asia Dollar Index and the Latin America Dollar Index to depict a more nuanced picture of the Dollar's performance not least because of the growing importance of Asia's major population centres and the evolution of Latin America's economies.

While the Real Trade Weighted U.S. Dollar Index: Other Important Trading Partners is only updated on a monthly basis, its long history offers an additional perspective on the greenback's performance that is worth considering. The St. Louis Fed defines the Index as:

Averages of daily figures. Series is price adjusted. A weighted average of the foreign exchange value of the U.S. dollar against a subset of the broad index currencies that do not circulate widely outside the country of issue.

Countries whose currencies are included in the other important trading partners index are Mexico, China, Taiwan, Korea, Singapore, Hong Kong, Malaysia, Brazil, Thailand, Philippines, Indonesia, India, Israel, Saudi Arabia, Russia, Argentina, Venezuela, Chile and Colombia.

At the last update on April 30th , the Index posted a new 32-year low and while the Dollar has firmed this month, the fact remains that it is trading at depressed levels on an historical basis. The Index is back to where it traded during the commodity boom of the 1970s. Rather than extrapolating the trend of weakness that has been evident for much of the last decade, the more rational approach would be to assume this area may offer a floor.

While the weakness of the Dollar has been of benefit to the USA's competitiveness, the other side of that equation is that no country is willing to tolerate a strong currency indefinitely. An increasing number of countries are acting to weaken their currencies. This suggests that while an outright Dollar bull story might be some way off, other currencies have strengthened to a point where they are meeting resistance in the eyes of their respective domestic administrations.

The tapering of the Fed's quantitative easing has not yet begun, and the eventual removal of QE is likely to be lengthy procedure. However, since the Fed was the first central bank to engage in QE, it is also likely to be the first to remove it. If this assumption is correct, the medium-term outlook for the Dollar should be positive, not least because it is coming from such low levels.