The Dollar Index Is At A Crucial Level

Tyler Durden's picture

Via Dana Lyons' Tumblr,

The U.S. Dollar is testing the breakout point of its 20-month trading range.

On an Inauguration Day in which the overriding theme of the incoming President’s speech was one of protectionism, it was fitting that the Chart Of The Day dealt with the U.S. Dollar protecting its own chart “turf”. Following the Dollar’s explosive rally from 2014 to 2015, it settled into a 20-month consolidation. In the case of the Dollar Index (DXY), this relatively tight range stretched from roughly 92.5 to 100.5. In the frenzied post-election action in the financial markets, the DXY was finally able to break out above the top of its range. And after a brief test of the 100.5 breakout area in early December, the DXY traded as high as 103.82.

In recent weeks, however, we have seen it pull back to where it is once again presently testing the 100.5 breakout level.



Many folks, including ourselves, have surmised that the 20-month trading range was likely just a digestion of the 2014-2015 rally and would put the Dollar into position to launch its next leg higher. For that theory to be correct, holding this breakout area may be crucial. Should the DXY indeed be successful at holding this level, a longer-term, more significant up-leg is certainly in play.

Of course, if the DXY fails to hold its breakout level, then a “false breakout” is the focus. And the downside potential following a false breakout could be considerable. Either way, a lot could be riding on this test right here in the Dollar.

Additionally, over the years, we have learned to judge each security and asset on its own merits. That is, the practice of “inter-market”, derivative analysis, or directing one’s investment in an asset based on the movement of another is vastly overrated. That said, if there is one asset that wields more influence over the behavior of others, it is likely the Dollar. Therefore, if one can correctly analyze the path of the Dollar, they have a decent shot at getting other assets right.

And that reality makes this current test that much more consequential. 

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More from Dana Lyons, JLFMI and My401kPro.

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Stan522's picture

Gold is still up.....

D Nyle's picture

If Trump can pull this off and reset the world order, I see a very strong dollar and rising gold, due to the flight to safety of the USA. Dirty money not allowed in the states will move to gold and physical US fiat (why the rush to cashless)

TahoeBilly2012's picture

Silver is perfectly wound for wave 3 of I of 3, with a micro 1 2, i ii ready set go!

jewish_master's picture

the corrupted USA is not a safe harbor of anything. u dont make anything besdies software. anyway the move in the dollar, and everything is controlled by a click of a mouse from the fed basment super computer

MFL5591's picture

The perfectly orchastrated fraud by Janet Yellen to dump in Trumps lap and tell the world he caused this  because all was good under Obamas watch!

BandGap's picture

I need to change careers.

These prognostications whereby if they don't happen, well then they are deemed "false" or a "fraud". I don't try to anticipate anything much beyond real time anymore, I am bound, more or less, to what happens at the start and end of the day. Fuck this.

And where is Harry Dent?

auricle's picture

Harry Dent would tell you the Dollar is going to bounce up off this support, and that gold will resume it's down ward trajectory. 

Bill of Rights's picture

Dollar needs to drop here big time to put fourth the Trump agenda...The whole " dollar is strong " is a complete farce really.

Rich Stoehner's picture

If everything is"made in America", then a strong dollar is good for Americans. Unless you want to export stuff...

remain calm's picture

Sure its a farce, but which currency or economy is not?

BabaLooey's picture

@Bill of Rights

The question is - against what other currency?

The Euro? That construct is as weak as day old dishwater.

The Yen? LOL......yeah

The Pound?

Gold and Silver - rightfully so.


THAT is the issue here. Drops against what other major currency?

Bill of Rights's picture

All true, and a strong dollar would be fine if " Made in America " was factual. Trump may get us there but not over night.

BabaLooey's picture


I can see a temporary "weakening" - and especially vs. countries that actually HAVE a decent economy - but against the known majors - it would be ONLY temporary. 

The "trump card" is Trump here. NONE of the other countries have leaders like Trump.

cowdiddly's picture

Trump will stomp the dollar right in the pussy.

almost has to if he plans on something as audacious as trying to outrun the 20T

and China will be going WTF, that was supposed to be OUR scam.

if we get the other Trump. the restructure and writedown King then that will get ugly quick.

ya want cher medicine in yuge spoonfuls of inflation or the whole damn bottle all at once.

jewish_master's picture

yes infaltion to erode the debt. also end of globaliztion means that all the dollars held by the world is coming back to the US. here in ths shithole israhell the central bank hold about 100 million, and were tiny.

quasi_verbatim's picture

Dollar index is a ragbag of other currencies, all carefully hedonistically weighted to mean fuck all. Bitcoin and camel dung are candidates for inclusion.

DI is useful casino fodder, but if you're reality based then $/1oz physical pet rock barbarian relic is the ratio to watch.



OldPost's picture

Exactly why Trump says the Dollar is too strong...the only thing you can export when the dollar is strong is dollars...if the jobs are gonna come back the dollar must devalue..this is why he calls out china for devaluing the yuan..

illuminatus's picture

And it's still the cleanest undie in the dirty clothes hamper.

MFL5591's picture

Everyone write Schumer today and tell him his policies were repudiated, needs to move aside and confirm all of Trumps picks.  the weekend game where he visted all the willing networks to bash Trump was dispicable!  Sick man with an agenda, time he goes away into retirement!

ms8173's picture

I am ONE tweet away from getting rich in the mining sector.... GO TRUMP!!!

BlowHard's picture

WV coal, Black green!

D Nyle's picture

Hopefully not coal, the whole story of suffering West Virginia is bullshit, went there last year, driving in from Ohio, it was like the deliverance movie, but then found out I could not get a hotel room , they all now do small natural gas setups everywhere. It was a fun trip but eventually had to leave to get a hotel room in Virginia

BlowHard's picture

Dude you're fucking moron, I live in West Virginia and you obviously know nothing about suffering or fossil fuel. Obama has hurt the people of my state by kicking us in the nuts with the EPA and land control. The next time you come to my state how about you visit the coal miners, maybe that'll change your opinion about the subject. 70% of the energy in this country comes from fossil fuel's. In 2015, West Virginia was the largest coal producer east of the Mississippi River. almost half (50 million short tons) of the coal that was mined in West Virginia was shipped to other states, and almost one-third (34 million short tons) was exported to foreign countries. Coal-fired electric power plants accounted for 94% of West Virginia's net electricity generation in 2015, natural gas contributed 1.8%, and renewable energy resources—primarily hydroelectric power and wind energy—contributed 3.7%. So as you can see now that I've educated you, natural gas in our state accounts for less than 2% of our output. We don't serve your type, So I say it again, you're a fucking moron and you're in D NYLE !

Jason T's picture

Just work and save.  



Dragon HAwk's picture

But what are the Hookers Saying.

BlowHard's picture

The dollar index would need to go below 70 to get my attention. Land is cheap in Mexico!

JRobby's picture

Professor Blinky, what does it mean when all currencies are falling simultaneously without references to historic price relationships?

orangegeek's picture

And now the markets drop and the USD rockets because....the economy is in trouble??? 




That marxist nigga and his bitch yellen have kept markets up and USD down until nigga goes home.


Now yellen and the lugenpresse, after markets tank and USD rockets, can blame Trump since he's been in office for almost a week - the degree of retard that lugenpresse pushes is well beyond comprehension.



ebworthen's picture

The value of the Dollar lost any basis in reality in 1972.

falak pema's picture

$ was the reference since BW, even revoked, "our money your problem" meant all other currencies lost all basis in reality too! 

Money was floated; relative to greenback, not gold.

The financial game became the recycling of Petromonarchy credits as corporate/sovereign via eurodollar privately managed markets in the City by the TBTF, outside the control of the FED --who in fact was owned by same TBTF cabal.

Circular logic controlled by banks which exploded in hyperinflation and malinvestment of credits recycled to third world clients (Brazil, Mexico etc.), that burst when second oil shock occurred and led to the Reaganomics model of pumping the debt into assets and deflating the revenues of the salaried class; after Volcker's dire inflation medicine in hi-rate austerity.

Now that asset pumping cannot be sustained in 2017... too many fighting oligarchs on all continents.

Its time to "cut n run" from global financial cartel games. Every man for himself !

So its time to hyperinflate the key money and blow away the debt. What else? If its drowning in debt that sounds reasonable.

Is that what the Duck will do or will he blow it to the others in currency/trade wars and hope to save his sole ship, as did the Magellan expedition?

Only one small ship came back to Seville, all others were lost!  

And the spice route was won by the king of empire on which the sun never sets!

Dream on the Duck ! Are you on the Victoria ?

A is A's picture

Why do the two dollar index charts look completely different?

Silver Savior's picture

Screw the buy nothing dollar. I fucking hate this currency. Get gold and silver with it before it's totally worthless. I hope Trump triples the national debt too and causes hyper inflation.