Yesterday marked another failed recovery attempt by the US dollar. It started out strongly, rallying .75 from the previous day’s lows based on the tax bill advancing in the Senate. But, political turmoil struck again. The latest twist in the Flynn/Mueller/Trump saga wasn’t exactly dollar-positive. DXY closed in the red for the third session in a row.
We shorted DXY way back on Nov 9, when it dropped through its SMA10. The move was confirmed on Nov 14 when the rising white channel broke down and hopes of a tag on the SMA200 or falling white channel top started looking iffy.
The bounce at the .618 Fib on Nov 27 gave dollar bulls hope. But, it has still yet to close above its SMA10, let alone the SMA100.
A backtest at 95+ is looking less and less likely every day. And, with another debt limit impasse ahead, the risks are mounting. If it can’t rally based on the tax bill or the all but certain Fed rate hike, what’s it going to take?
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