The U.S. dollar started rising on Thursday. This should not come as a surprise, given the pending debt ceiling deadline in the U.S. The more important question is how high the U.S. dollar can rise, and how it will impact metals and markets (and BTC as well).

In this article, we share a high level forecast as it relates to markets and metals (such as gold and silver). We remain optimistic in our general outlook for 2023, however we also expect periods of volatility like the one coming up, which will most likely be short-lived.

As a research team of chartists, our focus lies in uncovering insights from various market charts. Today, we delve into the U.S. dollar chart, highlighting its significance and intermarket influences. After all, understanding the U.S. dollar chart is vital, as it often exhibits a negative correlation with risk assets such as stocks and commodities.

The Importance of Analyzing the U.S. Dollar Chart

The U.S. dollar chart carries substantial intermarket influence, often playing a crucial role in global financial markets. Historically, the U.S. dollar has shown a negative correlation with risk assets. During times of market uncertainty or heightened risk aversion, investors tend to seek the relative safety of the U.S. dollar, causing it to strengthen. Conversely, when market sentiment improves, the U.S. dollar tends to weaken as investors seek higher-yielding assets.

For instance, during the global financial crisis of 2008, the U.S. dollar experienced a significant rally as investors sought refuge amid the market turmoil. Conversely, when risk appetite returned during the recovery phase, the U.S. dollar weakened as investors ventured into riskier assets, such as stocks and commodities.

This historical relationship highlights the importance of analyzing the U.S. dollar chart as a leading indicator for overall market sentiment, but only if there is a strong and outspoken trend (higher or lower) on the U.S. dollar chart.

The Message of the U.S. Dollar Chart

Turning our attention to the U.S. dollar chart since early 2022, we can observe a strong uptrend as depicted by the rising green channel. The peak was reached in October 2022, followed by a substantial decline. However, recent price action suggests the formation of a potential double bottom pattern between February and May 2023, spanning a three-month period.

Two prominent chart patterns come into play: the rounded pattern and the falling trendline. The rounded pattern indicates a potential bullish reversal, suggesting a shift in market sentiment favoring the U.S. dollar. This pattern, characterized by a rounded base followed by an upward move, often signals a change in trend from bearish to bullish.

Additionally, the falling trendline represents a significant resistance level that the U.S. dollar needs to overcome. As the U.S. dollar chart progresses, a successful breakout above this trendline would further validate the bullish scenario and open the path for further upside potential.

Conclusion

In conclusion, our analysis of the U.S. dollar chart reveals a bullish structure, signaling potential upside in the coming months. Based on our assessment, we anticipate an immediate target of 105.5 points, representing a 3% increase from the current level. Furthermore, the U.S. dollar has the potential to reach a secondary target of 109.8 points, a 7% increase, either in the short-term or later this year.

We expect the U.S. dollar to confirm a local top in markets and temporarily make it tougher for precious metals to rise, although there are other supportive leading indicators for precious metals which lead us to conclude that precious metals will witness a short-lived pullback.

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