scheplick

Everyone thinks the US Dollar will keep dropping but...

TVC:DXY   U.S. Dollar Currency Index
I created this chart simply to ask a question: everyone thinks the US Dollar will keep dropping. That will enable gold and silver and crypto to continue its rise. But what if everyone is getting too excited too fast? Markets rarely are this easy and more often than not they surprise people to the other direction.

So I made this chart to simply start a conversation with you or just as a journal for myself. Maybe the Dollar won't dip so fast after all and maybe a lot of us have it wrong. If it turns, it will turn fast.

We will find out shortly and I am not going to jump on this trade any time soon. Instead I will be watching closely.
I work at TradingView helping to build charts, tools, and software for everyone interested in financial markets.

Twitter: https://twitter.com/scheplick
Blog: https://scheplick.com/

Comments

I think before you can ask "what if it goes up" you need to ask a different question - why would it?
+10 Reply
@gaf56 well said ☯️
+1 Reply
Don't bet against the dollar. Big money and big institutions will not allow a big depreciation of value for long, as this would mean huge losses for them. Indeed they may move some wealth to other safe haven assets, but it's only a rather small percentage.
+1 Reply
jakepurdonmedds aureliscapital
@aureliscapital, This is incorrect, the total debt far exceeds the total reserves by as much as 10:1, which means that devaluation of the dollar makes financing debts easier, not harder.
+5 Reply
Also, depreciation of the dollar will help with American exports which is good to kickstart American production...so many variables at play here. We will have to wait and see.
+1 Reply
If you look around the market there is very little sign that the USD would actually break-out to the upside as you depicted as one of two possibilities. Firstly, no one really thought the USD would fall until it already happened; people on CNBC are bandwagoners and know nothing.

On a technical level, this is a bonafide high-top consolidation dating back over the last 6 or so years, and if anything it is likely on a pure technical level that within the next 6-12 months the DXY would fall to 80 or lower.
On a fundamental level, if the DXY actually went to 115-120 that would not only be deflationary but also crash the market. The Fed and central banks would never allow the USD to approach these levels and would use every tool in the sandbox, including massive currency swaps to prevent this. In reality, the Fed wants to crash the dollar to keep the equity market elevated for as long as possible.

On a pure "economic" standpoint, the USD typically rises prior to and during any sort of potential recession, but falls thereafter. As long as the "rest of the world" looks better, there is no reason for the USD to rise. If you take a look at Asia and EU they have combated the virus better than the US and their economic data has rebounded somewhat.

If you look at Gold and Silver they are telling you the USD also won't rise anytime soon. Moreover, for those who use "COT" as a way to set-up there trading - that is one of the biggest mistakes ever as its grossly oversimplified and cannot be used as a single means of predicting micro movements.

-zSplit
+6 Reply
@zSplit agreef
+1 Reply
@zSplit, How exactly would approaching 115-120 crash the market? Not scrutinising, just want to understand how that works. TIA!
Reply
Nice one.

USA seems awfully quite about their currency going to the dogs.

My thoughts are, either

This is a trap and we are soon to hear about and see a big ole reversal
or
They want their currency to go to the dogs because they could then use that as a reason / example as to why they should go full digital dollar
+6 Reply
scheplick Crypt1cLyfe
@Crypt1cLyfe, I am also thinking they want the Dollar to get weaker so that they can support more exports once again, make the exports more affordable, and at the same time help emerging countries with their dollar denom debt
+4 Reply
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