- The Dollar has broken below a significant support level of $101.2, indicating weakness and potential further decline.
- The Fibonacci retracements suggest a bearish target of $98.2, which is the 61% level.
- Equities and commodities typically rally when the Dollar weakens, as stocks are priced in Dollars.
Intro
The Dollar has finally broken below the support level of $101.2. This level has held since January of this year and is also the 50% Fib level if we measure the retracement from January 2021 to the high in September of last year. DXY appears very weak on the chart, and bears look to be targeting the 61% level at $98.2.
Weekly chart
RSI: The relative strength index is printing 35 at the moment. Still, 15 points to go until oversold, which confirms that we could see continued selling into the near future.
Fibonacci: The fib retracements give bears a target of $98.2, which is the 61% level as mentioned above.
DXY has broken below the support level that has held since January of this year. The sell-off has been powerful, and any buyers now would be catching a falling knife. Probabilities lie in the favor of the bears. Equities and commodities tend to rally when the Dollar falls. This is because stocks are priced in Dollars.
A weak dollar can contribute to inflation and higher input costs, negatively impacting corporate earnings and stock prices. Additionally, it may lead to capital outflows as investors seek better returns elsewhere. The impact of a weak dollar on equity markets depends on various factors and can vary across sectors and companies.
Ending off
As the selling accelerates in the Dollar, we should see equity markets rally. There is little to no bullish case right now for the Dollar, which means traders can focus their energy on looking for long opportunities in equity and commodity markets.
What this means for markets
Equities and commodities tend to rally when the Dollar falls. This is because stocks are priced in Dollars.
A weak dollar can contribute to inflation and higher input costs, negatively impacting corporate earnings and stock prices. Additionally, it may lead to capital outflows as investors seek better returns elsewhere. The impact of a weak dollar on equity markets depends on various factors and can vary across sectors and companies.
Ending off
As the selling accelerates in the Dollar, we should see equity markets rally. There is little to no bullish case right now for the Dollar, which means traders can focus their energy on looking for long opportunities in equity and commodity markets.
