From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
Earlier in the month, we pointed out breadth deterioration in the US dollar.
While the dollar pressed to new highs against the yen, the pound, and the euro, it struggled to gain ground against commodity-centric and emerging market currencies.
The lack of broad strength had us questioning the validity of the recent rally in the US Dollar Index $DXY.
That’s changed recently.
Today, the dollar index is catching to new highs against a backdrop of broadening strength, not weakness. Now that we’re seeing dollar internals flip and start to confirm these new highs from the index, this is not a trend we want to fight.
And, to be clear, we haven’t been.
While we’ve been skeptical of the rally in the DXY, we’ve expressed a bullish view on the dollar via the major crosses. They’ve been the weakest links and main drivers of DXY strength.
And now that we’re seeing dollar strength expand, we have more options to express a bullish thesis.
Let’s talk about one of those now.