The U.S. Dollar Index has trended steadily lower for the last 10 months. But there are growing signs it has bottomed.
First, DXY managed to break back above its 50-day simple moving average in late February. It then made a higher high (versus earlier in the month), unlike its lower high in late November.
Next, it tried to sell off after the Fed’s uber dovish meeting last week, but quickly moved higher. Next, the bounce occurred around the highs of March 2 and February 5. That suggests resistance has become support.
Third, the 21-day exponential moving average (EMA) has crossed above the 100-day simple moving average (SMA). The 50-day SMA is about to follow suit. This reverses a pattern in place since the slide began in June.
This strength in DXY could be a warning sign for equities for two reasons. First, it comes despite the Fed’s dovish policy. Second, global-growth assets like the Australian dollar and copper have shown signs of hitting a wall lately. This bounce in the greenback could morph into a flight to safety.
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Shall we neglect all macroeconomic and monetary policy principles, and agree that printing TRILLIONS in new currency, meanwhile proposing to print trillions more, will somehow strengthen the underlying currency? Is this post intended to be satirical?
Lord_Raximus
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@JRSone this why 99% of tasers never get nice things, idiots run this or trolls run noise box.
agree with on everything, USD is tanking tomorrow , done and done.
Lord_Raximus
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trader's**
lonestar108
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Yes
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volsupply
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Supply, supply, supply. First argument for lower. 2nd would be the structural home-shoring of production from China. That implies that more US production intuitively give the biggest buyer of US treasuries less of a reason to reinvest its USD in Treasury simply due to less off it (again back to supply). China mean while will get a Japan fall out over time as its gotten to big for its on good as this covid crisis has lade bear. Lots of supply lines will shift away from China forward and China will do what the world has been asking, which is to develop a sustainable econ model of self-sufficient activities (circular) instead of only export oriented. All this will be good in the end but the shift will create volatility and pain. Separate issue is the USD 16-year cycle which just started its decent lasting until 2026 and adding to that a 3 year bottoming process brings you into a bear market lasting until 2029. Currently we are doing the bull move in a bear supply market which is quite normal. That will continue down looking at the DXY in a short while after it breaks the current support. May 2021 brings another supply issue - another stimulus packaged same size as the current one. So supply, supply, supply is key words. We could go on about infrastructure worldwide and commodities cycle that is aligned with that, but that is a given on the first argument.
yunzhou
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@volsupply, so if demmand phase DXY to be up related to supply phase?
TheCrypt0grfr
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Anyone who believes this is and actually follows through on taking a forex position due to thinking DXY has bottomed is straight up being manipulated into handing you their liquidity. Use broker post as counter-indicators people.
@TheCrypt0grfr, yes sinister OP really needs your retail liquidity in USD. author is just pointing out the shift in tide. this has so many implications on other asset classes.
hardkornate
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I find it hard to believe dxy is going to go up when they are about to print more dollars.