The dollar has gone from slinging cheese to lobbing cookies.
Sellers finally got ahold of the US Dollar Index $DXY on Tuesday, sending it on its steepest single-day decline since October 2022.
Recall what followed for the dollar…
The DXY formed a major top and fell victim to not one but two subsequent 1 percent-plus daily drawdowns.
Check out the DXY chart with the one-day rate-of-change in the upper pane:
The DXY dropped almost 1.5% during Tuesday's session. That’s a huge move for a currency (with the exception of the Turkish lira and perhaps the Polish zloty).
But where can we define the next logical upside objectives?
Let’s dive in…
Before tackling our targets for the dollar-yen pair, check out the Japanese 10-year yield:
The BoJ’s yield curve control policy has, in large part, capped the USD/JPY rate as traders and policymakers play a game of chicken. Traders drive the dollar-yen pair higher, challenging the Japanese central bank's hold on interest rates.
Meanwhile, the BoJ steps in with policy decisions supportive of the yen.
Monday night we held our September Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
The negative correlation between equities and the dollar remains intact, representing a fundamental piece of the current intermarket puzzle.
When the dollar strengthens, stocks tend to fall under selling pressure. On the flip side, stocks often enjoy strong bull runs when the dollar trends lower.