Long term:
The Dollar has been range bound since 2015 in a rectangular formation. The Dollar is at a critical spot right now and is looking for bullish/bearish price action. There is a line of support/resistance at 94.7. DXY is approaching this line as resistance. If it gets above this line this is bearish for equities, btc, gold, commodities. If it goes below those same assets will boom.
Short term:
Since after the Covid crash there have been certain periods dollar strength and weakness dictate markets. This is due to high volatility in all asset classes (a lot of dollars being transacted) and easy monetary policy, government handouts which inflated assets. The graph shows DXY compared with SPY notice in the first and third period (now) they are inversely correlated.
1. In the first period (03/20-01/21) there was a negative correlation.
2. From (01/21 - 03/21) the US10Y skyrocketed by 77%. A higher yield on the dollar compared to global currencies enticed some investors.
3. Since 09/21 we have reverted back to SPY being negatively correlated. Investors are wary of the markets and hiding out in cash.
I like to take into account the movement of the dollar in my investment decisions.
The Dollar has been range bound since 2015 in a rectangular formation. The Dollar is at a critical spot right now and is looking for bullish/bearish price action. There is a line of support/resistance at 94.7. DXY is approaching this line as resistance. If it gets above this line this is bearish for equities, btc, gold, commodities. If it goes below those same assets will boom.
Short term:
Since after the Covid crash there have been certain periods dollar strength and weakness dictate markets. This is due to high volatility in all asset classes (a lot of dollars being transacted) and easy monetary policy, government handouts which inflated assets. The graph shows DXY compared with SPY notice in the first and third period (now) they are inversely correlated.
1. In the first period (03/20-01/21) there was a negative correlation.
2. From (01/21 - 03/21) the US10Y skyrocketed by 77%. A higher yield on the dollar compared to global currencies enticed some investors.
3. Since 09/21 we have reverted back to SPY being negatively correlated. Investors are wary of the markets and hiding out in cash.
I like to take into account the movement of the dollar in my investment decisions.
Comment:
The blue chart shows correlation. An area above the middle line shows positive correlation (both SPY and DXY move up or down together), below shows negative correlation.