All Eyes On USD
The Dollar Index has declined 3% since last Thursday and in so doing, has sliced beneath its 13-month support line at 96.10, and has pressed below its 200-Day EMA (93.95) in route to a full-fledged test of 6-month support between 94.00 and 93.00.
A sustained breach of 93.15/00 in DX will confirm the establishment of a major top in the U.S. dollar, which will trigger an optimal, downside target in the vicinity of 87.00-86.00 in the hours/days ahead.
Should such a scenario unfold, I will be expecting buoyancy in the precious-metals sector and be very curious about the reaction of investors to U.S. Treasuries:
Will scared money flow into bonds amidst an acutely weak U.S. dollar? Or, will U.S. rates actually back up within a weak dollar scenario?