From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
A couple of weeks ago, we posed this question in a post titled “Can the Dollar best the BRICS?”
Back then, we were already leaning toward “NO.” Fast forward to today, and it’s more like a “NO WAY.”
The reason for this is simple. In that post, we explained the line in the sand for our USD/BRICS Index was ~19.
In the few weeks since, this critical level has been violated. The market has spoken, and it’s saying we’re in for a lower US Dollar relative to BRIC-country currencies.
For you visual learners… This is what the chart looked like back then, and here is what it looks like now. Quite the difference, right?
This is just another data point in what’s become a rather long list of evidence pointing to broad US Dollar weakness over both short and long-term timeframes. We continue to see it everywhere.
Not only has the USD violated a critical level of former resistance turned support in our custom index, but it has also broken key levels of support against the Russian Ruble, Chinese Yuan, and the South African Rand – which are three of the five BRICS Currency Index components.
As many of the BRICS currencies are starting to show strength relative to the USD, let’s turn our attention to one of the holdouts, at least for now.