A quick update on the counter-party to the risk ‘on’, inflated markets. The US dollar is aloft along with the Gold/Silver ratio, which is dis-inflationary signaling and also potentially risk ‘off’ signaling. The issue being that if risk goes ‘off’ global investment/trading entities seek the liquidity of the senior (reserve) currency.
USD (DXY) is just below the 50 day average, which is turning into a line in the sand between further upside and failure. This after taking out our 3 upside targets. If USD fails here we will look to support at the SMA 200 (93.73 and sloping upward). If it regains the bull by taking out the SMA 50 we’d have much caution across many US and global markets, especially the inflation/reflation sensitive ones.
For reference, here is a closer view of the situation at the SMA 50.
