Quick note on the U.S. Dollar Index ($DXY).
As you know, we have been positive on the $DXY since late February, looking for a short-term reversal from the $89.92 area as it broke out from its post-COVID-19 downtrend. As it stands today, that brief rally may have run its course.
Here’s the U.S. Dollar Index ($DXY) daily chart.
After a constructive 3.5-point rally from our $89.92 pivot, the $DXY is struggling below the 200-day simple moving average (“SMA”) and is currently in the $91.95-92.25 range (grey box) that has been an area of interest since last summer.
Was the recent rally a short-term reversal with the context of a longer-term downtrend? Or is this beginning of a sustained move back into the $89.92-101.80 range that has contained price since 2015? The direction we break from this tight range may give us the answer.
Here’s the weekly $DXY chart to show you that larger range from 2015.
The U.S. Dollar futures seasonality chart from Equity Clock shows we are entering a historically weak time of the year for the Dollar.
April has actually been the weakest month over the past 20 years, being positive only 30% of the time and losing 1.0% on average. The rest of the year doesn’t look too great either...
What do you think?
Given the U.S. Dollar’s implications for various intermarket relationships, the direction we resolve from here will be important from a portfolio management perspective. Think EM, commodities, and the like.
That’s it for tonight. Have a good one!
Cheers!