The U.S. dollar index has a tendency to reverse when the market adopts an anti-dollar trade and may do so again.
USDX – Daily Chart
The USDX is testing resistance at the 98.44 level and is now eyeing a move to the next resistance level at 100.
The markets have been trading the anti-dollar trade very strongly since the arrival of Trump’s tariff regime. Many saw that as a chance for countries overseas to disconnect from U.S trade, and efforts by the BRICs countries have been in focus.
Investors have also latched onto the highs in gold as a market vote against the dollar and the U.S. economy. However, the U.S. remains the world’s largest financial market and is unlikely to relinquish that status anytime soon. France’s political turmoil could be a reason for markets to take profits on their European trades soon.
However, Citadel CEO Ken Griffin has said that more investors now see gold as a safer option than the dollar, a shift he finds “really concerning”. He told Bloomberg that many are moving their money away from dollar-based assets to reduce exposure to U.S. government debt.
“We’re definitely on a bit of a sugar high in the US economy right now,” Griffin said. The hedge fund manager sees that fading soon, and investors are also worried about the current government shutdown.
However, the trend is the trend, and the USDX could break through resistance here, proving the doubters wrong.
