The US dollar has been on an absolute tear lately despite a rate cut and "quasi-QE" from the Federal Reserve. A week or two ago I was predicting that the dollar would break its uptrend and that gold would return to strength due to the Fed's efforts to boost inflation, but we certainly didn't see any evidence of that this week. Some analysts are going so far as to say that the Fed has "lost control" of inflation and will be unable to weaken the dollar despite heroic efforts.
I wouldn't go *that* far yet. This week's dollar rally is probably tied to the breakout in the stock market, and it may pull back as soon as the market does.With the normalization of the bond yield curve, recession fears have faded and gold has lost its attractiveness as a safe haven. Investors are back in stocks and cash and likely to stay there for the foreseeable future. This repositioning by investors adds noise to currency markets that may temporarily obscure the effects of the Fed's policies. Once the noise goes away, we'll get a clearer picture of what the dollar's trajectory will be.
In the meantime, the dollar is at a critical volume resistance node and nearing RSI resistance at 60. The upside prevails as long as it holds its upward trend line. If it approaches the red trend line and the top of the blue parallel channel, that would be the time to short the dollar or pivot into gold for a scalp as the dollar bounces from the top of the channel.
I wouldn't go *that* far yet. This week's dollar rally is probably tied to the breakout in the stock market, and it may pull back as soon as the market does.With the normalization of the bond yield curve, recession fears have faded and gold has lost its attractiveness as a safe haven. Investors are back in stocks and cash and likely to stay there for the foreseeable future. This repositioning by investors adds noise to currency markets that may temporarily obscure the effects of the Fed's policies. Once the noise goes away, we'll get a clearer picture of what the dollar's trajectory will be.
In the meantime, the dollar is at a critical volume resistance node and nearing RSI resistance at 60. The upside prevails as long as it holds its upward trend line. If it approaches the red trend line and the top of the blue parallel channel, that would be the time to short the dollar or pivot into gold for a scalp as the dollar bounces from the top of the channel.
Comment:
The dollar broke the trend line today, so here's the new triangle.
