Which Way the USD?

There’s no Fibonacci argument for lower prices in SPX at the present time; but, the fact that the USD remains stuck at the inflection point we discussed last week suggests this corrective move down from 2011 isn’t yet complete.

2014-09-15-DX 60 0600

Recall that the .886 Fib is a larger scale reversal point that coincides with a channel midline that has been quite effective in the past.

2014-09-15-DX daily 0600

The correlation between SPX and DX has oscillated significantly over the years.

2014-09-15-DX v SPX wkly

But, given that much of the equity strength since Oct 2011 has been based on USDJPY strength (yen weakness), I think this bears watching.

2014-09-15-USDJPY v SPX daily

SPX has two moving averages that happen to coincide with significant Fib levels.  I tend to think the current corrective movement will seek one of these targets.

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