The US dollar is on the ledge. The only question now: Is a shove coming?
Take a look at the MoneyShow Chart of the Day showing the ICE US Dollar Index (DXY) from a long-term perspective. It’s not pretty.
DXY just knifed through 100 to the downside. It’s now testing key support that dates back the last few years. Moreover, its year-to-date loss of around 6% puts the greenback on track for its worst annual performance since 2017 (though yes, there’s plenty of time until New Year’s Eve!)
I talked about the main reasons why the dollar is diving in my April 11 column HERE. But even though they’re more widely known and accepted now…and even though selling has been very aggressive since January...I haven’t seen a key reversal or massive flush on the shorter-term chart (below).
That means it’s (still) hard to lean against the trend as a trader. And if you’re a longer-term investor worried about foreign dumping of US assets hurting stocks and bonds? Well, you’re not seeing much encouraging here...yet. Even with investor sentiment in the dumpster and contrarian plays looking more tempting because of it!
Bottom line: It’s probably best to hold your fire before getting aggressive to the long side.
