USDJPY reached our target at the SMA100/SMA200 overnight, at least temporarily bringing the pair back below the top of the falling white channel from which it broke out on July 10. Readers will recall that breakout was instrumental in helping SPX break above its faux IH&S neckline 66 points ago.
A USDJPY rebound here is all stocks might need to make new highs. EURUSD, which is backtesting after a major channel breakdown, would certainly support a strengthening of the USD……as would DXY — which is the latest victim of “unpresidented” tweets.
As central bankers have recently discovered, however, there are complications from continued dollar strength which would suggest that it take a break. Will they heed those warnings, or are new all-time highs in equity markets more important?
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