The Big Risk For The U.S. Dollar

In this video we look at the big (upside) risk for the US Dollar Index (DXY). Specifically, the video walks you through a couple of slides of a recent edition of the Weekly Macro Themes report. In the video we talk through the big charts to be watching for the US dollar outlook.

The main conclusion is that considerable upside might be in store for the US dollar as compelling yield support remains, speculative futures positioning is stretched to the downside, breadth metrics are extreme oversold, and seasonality is about to turn positive. The analog chart also lays out the potential upside were history to repeat – and as noted, there are a couple of key macro parallels between now and the late 90’s.

Further, the EURUSD looks stretched to the upside, and is seemingly due at least a pause if not a pullback. Hence, there is certainly a case for near term upside risk. As the US dollar is a key variable for many markets and economies, this is definitely one to have on your radar.

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