From the Desk of Ian Culley @IanCulley
The dollar has gone from slinging cheese to lobbing cookies.
Sellers finally got ahold of the US Dollar Index $DXY on Tuesday, sending it on its steepest single-day decline since October 2022.
Recall what followed for the dollar…
The DXY formed a major top and fell victim to not one but two subsequent 1 percent-plus daily drawdowns.
Check out the DXY chart with the one-day rate-of-change in the upper pane:
The DXY dropped almost 1.5% during Tuesday’s session. That’s a huge move for a currency (with the exception of the Turkish lira and perhaps the Polish zloty).
Based on the action witnessed last fall, it wouldn’t be surprising for the DXY to experience a reprieve from selling pressure in the coming days, followed by renewed downside action.
As I mentioned last week, “If and when it (the DXY) falls below approximately 104.25, it’s time to consider making a change.”
On Wednesday, the DXY hovered just above that critical level.
A decisive close below our line in the sand signals an end to dollar headwinds and the beginning of the next leg higher for equities.
Just in time for the holidays!
As the DXY bends lower, let the stock market bulls tell you what they know.
They already have, if you’re listening.
Stay tuned!
Thanks for reading.
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