The US dollar got knocked down this morning as the Fed prepares to launch what I believe will be its last volley of support for the reserve currency. But USD is still in the ballgame, where a potential support hold is in play.
We have been tracking the combo of USD and the Gold/Silver ratio (GSR, GLD/SLV shown here) as co-bringers of market liquidity stress and hence, correction. The GSR is still postured to bounce in the face of the macro sentiment event about to unleash itself upon us in 20 minutes. Just an FYI that GSR is diverging USD today. Could be nothing or it could be a hint of that both items could hold and bounce.
Bottom Line
- USD is down but holding support and the previously noted double bottom potential.
- GSR is postured to bounce, with RSI constructive and MACD triggered, although both are negative and recovering a bit from oversold levels.
- None of this will matter if markets decide to ‘buy the news’ of whatever the Fed may put in its statement, as USD and GSR would likely drop in conjunction with a market celebration.
- It will matter if USD and GSR hold and indicate a market selling the news.
