The US dollar index continues to hold its bounce/rally from late December. What’s more, in pre-market this morning it is above both the 200 and 50 day moving averages. Resistance at 99 has very tentatively turned to support. RSI and MACD are both aligned for continued rally.
The Gold/Silver ratio (GSR) is also positive. Let’s keep in mind this is one day, not a macro trend. If a new trend of USD and GSR rising together manifests, a caution on the precious metals, commodities and some other markets would be in place. A strong caution.
The GSR broke down through our initial downside target and is currently at 51.96 after hitting a low of 49.44. The next downside target is/was around 47.50. We could still be on the way to that level, but none of this is set in stone. Especially not a support target on a ratio indicator.
So until silver regathers itself nominally and vs. gold, and until the USD aborts its rally, we should have a level of caution and realize that risk is and has been high in many markets. Although, I still have a hunch about Tech remaining positive for a bit if disinflationary winds blow and USD and GSR rise, but not impulsively.
Too many words above. Keep it simple. A concurrent rise in the USD and GSR would likely pressure many of our markets of interest. If this is just a one or two day thing, it’s as you were… bullish with risk rising.
