US Dollar Index Continues to Evolve Amidst Bearish Trend

I and NFTRH subscribers have been keeping well aware of the implications of a) USD following its daily chart downtrend, or b) painting the July plunge as a bear trap and going bullish again. We’ll leave the detailed implications aside in this post and simply note that the process is still evolving. USD can break through it [clear resistance at the time, now support] and test the SMA 50 and still remain in a downtrend.

But as yet the major daily chart trend is down and a test of the SMA 200 will be very important. Despite the weakening inflation signals in the wider macro and slowly decelerating economy, which would indicate a weakening Fed from its hawkish stance, the US dollar is improbably still buoyant. Except that it was not improbable. It was right there in the July 19 update linked above.

While our operating plan has been for a resumed bear phase within USD’s long-term bull market, there is a perfectly viable scenario where USD could break the daily chart bear trend. That scenario is an asset market liquidity crisis that would, despite the “dedollarization” touts, drive the herds to the perceived safety and liquidity of the US dollar.

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