The spring/summer inflation cool down always was going to bring a bounce in the US dollar, AKA the global anti-market or counter-party to the big inflation/reflation trades that everybody came to KNOW were bullish in March. It appears to be a short covering rally, but I think its power will persist beyond the after effects of the June FOMC.
Importantly, the daily chart shows that the last low in USD (DXY) was a higher low than the January low. What that does is open the door for a higher high than the March high. Resistance is at 94.64 or thereabouts. Daily RSI is positive, got peppy and is cooling down a bit and MACD has gone positive. These are beneficial to a continued bounce.
The weekly chart adds in some Fib retrace levels off the double bottom. Wouldn’t you know, there sits the 94.64 area resistance right at the 38% Fib retrace level. At this point let’s target the bounce in the US dollar to 94.50 to 96 (50% Fib retrace).
If the targets are good then there will be more pain across many or most markets this summer before the situation improves. As usual we’ll watch the precious metals for signs of first movement out of the correction to the next inflationary phase (if applicable, as favored).
Meanwhile, all of the above is also congruent with the idea that the 30yr yield Continuum is making a right side shoulder (an easing of inflationary pressures) as we’ve long anticipated. Personally, I will take further cash raising action if/as needed and not try to build Rome in day. We’ve got all year (and beyond) for that.
