I can’t stand The U.S Dollar.
You know that…..everyone knows that. The actions of The U.S Federal Reserve with it’s complete and total disrespect for the currency and continued abuse of it’s position as the “world’s reserve currency” is enough to make anyone sick.
So when would we start looking for USD to move higher? Why would we even “consider there a chance” for this beaten down piece of junk to go anywhere but down the toilet?
Hmmmm………
What many fail to understand is that “the value of a given” currency can only be deemed in “comparison” to another currency…or another asset. The pieces of paper themselves carry no intrinsic value what so ever.
Consideration of “dollar strength or weakness” as compared to a single thing ( like The Euro for example ) is ridiculous as….it is exactly that – a “comparison” of only two given currencies.
So……..
How’s the U.S Dollar stacking up against The Canadian Dollar?
Looks like a fantastic buy opportuntiy as USD has merely “pulled back” vs Cad.
USD vs CHF looks like a pretty classic reversal over the past few months, making a higher high, breaking the series of lower lows and lower highs. A swing low “somewhere in here” would mark a fantastic entry point long.
What about Crude Oil?
Pretty straight forward. When the price of something “goes down” in can equally be argued that the “value of the money” you are using to purchase such products has “gone up”.
What many just can’t wrap their heads around ( one dumb fellow in particular ) is that “there is no blanket statement” in considering being “long or short” USD as it only depends “against what”?
Another chart “sniffing out” coming USD strength:
CNBC_Josh_Brown_Market_Call
A good indication of a stonger dollar can be seen when Emerging Markets start to fall.
Imagine all that “free paper money” printed by The Fed and in turn “invested abroad” as to actually get some return ( you don’t actually think the banks invest the money they get from The Fed in “America” do you? – Please.) piling back into U.S bank accounts / converted back to U.S with concern for a possible rise in interest rates.
An absolute “sunami” of USD floods out of Emerging Markets and back into the United States, on even the smallest “hint” that interest rates may rise.
But……Interest rates ARE rising! In fact….( how soon you forget ) that interest rates on the 10 year U.S Treasury have DOUBLED in the past year and a half!
Rising interest rates cramp corporate borrowing and in turn kill bottom lines. A rise in rates pushes USD up, as well equities down.
Rates have already reversed, adding more fuel to the fire if considering a stronger dollar.
The short term squiggles are more or less meaningless at this point as…..The Fed and Central Banks abroad are just doing what they can to grind this thing a little longer before shit hit’s the fan.
How much longer can they keep this propped up? Not much longer if you ask me.
The Technical Setup: Why USD Bulls Are Getting Ready
The charts don’t lie, and right now they’re screaming one thing: the dollar is coiling for a massive move higher. While everyone’s busy crying about inflation and Fed policy, smart money is positioning for what’s coming next. This isn’t about loving the greenback – it’s about reading the damn market.
Interest Rate Reality Check
Here’s what the doomsayers refuse to acknowledge: rates are already doing the heavy lifting. That doubling in 10-year Treasury yields isn’t some abstract number – it’s rocket fuel for USD strength. Every basis point higher makes dollar-denominated assets more attractive, and we’re just getting started.
The Fed might talk tough about fighting inflation, but the bond market is setting the real agenda. Corporate America is already feeling the squeeze as borrowing costs climb, and that pressure creates a feedback loop that pushes the dollar even higher. Smart traders see this setup from miles away.
Capital Flight From Emerging Markets
Watch the emerging markets – they’re the canary in the coal mine for dollar strength. All that cheap money that flooded into developing economies over the past decade? It’s heading for the exits faster than tourists leaving a war zone. Brazil, Indonesia, South Africa – they’re all watching their currencies get demolished as capital flees back to Uncle Sam.
This isn’t gradual profit-taking. This is panic liquidation disguised as portfolio rebalancing. When pension funds and sovereign wealth funds start dumping EM assets, that mountain of dollars comes roaring back home. The USD weakness crowd completely misses this dynamic.
Technical Confirmation Across Multiple Pairs
USD/CAD is painting a textbook reversal pattern. That pullback everyone’s worried about? It’s a gift-wrapped entry point for the next leg higher. Oil’s weakness is just confirming what the charts already know – commodity currencies are about to get steamrolled.
USD/CHF broke its downtrend like it was tissue paper. The Swiss franc, that supposed safe haven, is getting crushed by simple interest rate arithmetic. When even the traditionalists start buying dollars over francs, you know the tide has turned.
EUR/USD? Don’t make me laugh. Europe’s energy crisis and recession fears make the eurozone look like economic roadkill compared to the US. That parity target everyone dismissed as impossible? Start taking it seriously.
The Bigger Picture: Dollar Dominance Reasserts Itself
This is where the conspiracy theorists and gold bugs get it completely wrong. They think the dollar’s reserve currency status is some kind of accident that’s about to unwind. Reality check: it’s backed by the most liquid markets, the strongest military, and now rising yields that make holding dollars profitable again.
China can talk about yuan internationalization all they want. Russia can pitch BRICS currencies until they’re blue in the face. But when crisis hits – and it always does – money flows to dollars faster than water running downhill. The recent market volatility proved this once again.
The dollar isn’t rising because it’s fundamentally sound – it’s rising because everything else looks worse. That’s not a bug in the system, it’s a feature. As long as the US remains the cleanest dirty shirt in the laundry basket, capital will keep flowing here regardless of how much we hate Fed policy.
Position accordingly. The dollar rally isn’t coming – it’s already here. The only question is how long it takes the market to catch up with what the charts are screaming.
