Tags: dollar | topped | currency

Has the US Dollar Topped Out?

Has the US Dollar Topped Out?
(Mike2focus/Dreamstime)

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Friday, 15 November 2019 09:19 AM Current | Bio | Archive

Assuming the answer is yes, three points to explore:

  1. Where would I reverse that opinion?
  2. If correct, what does that mean for the markets and economy?
  3. If correct, where is the underlying support?

On the dollar, I would reverse the bias of a top should the U.S. dollar futures index (DXY) first clear 98.45 or November highs, but even more so if DXY takes out 99.40 or the October highs.

If the dollar has topped out, it means several things for the market.

First off, it means that the cost of some goods is cheaper, which is better for American exports.

On the other hand, a cheaper dollar means the currency buys less, especially commodities and goods produced overseas.

Would that spark more inflationary conversation? Possibly yes.

As the dollar does not trade in a vacuum, we have to watch the yields, the next moves of the Fed and the overall economic indicators for signs of deterioration.

Furthermore, we will see signs from the metals (gold and silver will rise in price), and that odd barometer-sugar futures, which continues to base out.

The trickle effect to the market, should the dollar drop precipitously, is negative. Folks will get scared.

The biggest issue looming, considering the rising debt, is that the dollar loses its place as the world's reserve currency.

That is the worst-case scenario.

Technically, the support levels for now are at 97.20 or the October and November lows. Should that level fail, we are looking at 96.20 or June lows.

Either way, the fall would be significant enough to bring buyers into commodities and sellers into equities.

Michele ‘Mish’ Schneider serves as Director of Trading Education at MarketGauge.com. For 20 years, MarketGauge.com has provided financial information and education to thousands. MarketWatch named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish won the Top Stock Pick of the year for RealVision. Follow her on Twitter at Michele Schneider @marketminute.

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The trickle effect to the market, should the dollar drop precipitously, is negative. Folks will get scared.
dollar, topped, currency
326
2019-19-15
Friday, 15 November 2019 09:19 AM
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