Currency Report: Breakdown Retest in the Dollar

We’ve been pounding the table on a weak dollar cycle for months now… and it’s been working very well.

But asset prices rarely trend in straight lines. All trends have countertrends. 

Some reversions are strong, others are feeble. And the strength—or lack thereof—can tell us a lot.

That’s exactly what we’re seeing right now in the US Dollar Index $DXY.

After completing a massive top earlier this year, the dollar staged a relief rally—but was quickly rejected at former support.

Now this level is acting as resistance.

That’s polarity in action.

This is what failed rallies look like. And unless DXY can reclaim that key zone in a hurry, the path of least resistance remains lower. 

We don’t need to guess what this means for the rest of the market, we’ve been writing about it all year long. 

Metals, mining stocks, and international equities––they tend to do best when the dollar weakens. That’s the environment we’ve been in. And this retest just strengthens that backdrop.

So yes, all trends have countertrends.

But we use price to tell us who is really in control; bulls or bears. 

Right now? The Dollar remains in bearish territory.

And until proven otherwise, we’re staying with it.