From the Desk of Ian Culley @IanCulley
The US Dollar Index $DXY has resumed its march toward fresh lows.
It took a less direct route, meandering sideways for the past seven months.
Nevertheless, our roadmap for a DXY breakdown has remained useful.
These are key developments that support further USD weakness, leading us toward today’s breakdown.
Thanks to sellers taking control of the market, today’s session is offering another critical piece of confirming evidence…
An oversold reading on the 14-day RSI.
Notice DXY never registered an RSI print below 30, even during the strong selloff last fall.
Wednesday’s oversold reading marks a significant shift in momentum. The bullish regime that has remained in place since the beginning of DXY’s parabolic advance in 2021 has lifted.
The dollar bears have gained control of the index.
It makes perfect sense.
Stocks worldwide have enjoyed a consistent bid over the past six months while the dollar has gone nowhere.
Imagine how they’ll react once a falling dollar picks up the pace.
Momentum is finally swinging back into the bears’ court.
We expect renewed tailwinds for stocks and commodities (especially gold) in the coming weeks and months if sellers continue to drive the dollar lower.
Let me know what you think. I love hearing from you!
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