The DXY has been in a position like this 3 times in history
1985 | 2001 | 2023
Every time the DXY has had a TSI 4W cross while the Stoch RSI was in the afterburn stage of rising with the Japanese Currency (JPY) either breaking major support or major resistance it has led to a complete rubber band reversal of the DXY.
We now have the USDJPY hanging onto to support from 1990s.
DXY losing momentum, PMI index reverting.
DXY in Burn Zone. TSI showing strength loss.
Annual inflation rate in the US 3%
Does not matter if you think the SPY is overvalued, the FRED is done raising rates Inflation has collapsed (for now) meaning their next option is to hold / drop rates + initiate stimulus.
This will cause a panic reaction and rush back into all assets away from bonds and money market funds.
Recession will be avoided for 2024 and many will blame the FRED for "printing money"
but the reality is this is going to cause every market to overheat and burn up depending on how fast the DXY reverts.
This is where you get the flash backs of 1920s leverage something worse will develop over the next years and create a larger problem. Get the popcorn ready.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.