However, after posting on pending technical weakness here, the dollar has retreated slightly over the last few days. Price action as traded neatly within a on the , and potential signals of another move downward are pending:
- The daily has broken through an indicator , and the indicator is signaling a highly overbought condition. If price price action continues to falter, a sell signal below 80 could trigger selling pressure.
- In order to regain upward momentum, the DXY would have to close above channel resistance near 95.66; 96.55 will be key resistance point in order to challenge 98. If selling pressure does occur, DXY will likely seek out 93.80 (50% fib retracement from current minor uptrend)
The long-term macro dollar theme continues to be deflationary. It is important to note, a spike in has been a late cycle occurrence. Every U.S. recession since the mid-1950s has seen an increase in (after previously declining).
We must also include that as the global economy continues to slow, global central banks will look to continue monetary easing this will at least support the greenback. Furthermore, as the U.S. economy rolls over, a deflationary spiral is expected to occur.
MacroView is still expecting the U.S. economy to reach recession between Q2-3 once final data revisions occur.
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MacroView is modeling for roughly 50 bps increase in fed funds rate, primarily based on market pressures to "normalize" policy. We're fully aware that any increase will not only strengthen the dollar and erode inflationary outlooks but deteriorate equities.