Is The Dollar About To Crash?

What a blessing. And I must say… parents have to be super excited about the prospects of their kids doing at-home online schooling for well into the foreseeable future. Let’s plug our little ones in and get all great this knowledge into their tiny impressionable brains right away, I say!

Alright, sarcasm quota has been hit for the day.

Now I’m going to tell you why the internet is wrong, again.

This is part of my ongoing series titled “The Internet Is Wrong, Again”. You can find my first in the series titled “Yield Curve Inversion: Why This Time is Different” from way back in early 2019 when the consensus thinking was that a recession and bear market was nigh. And then there’s my popular follow-up in the series titled “Much Ado About Nothing: Repo Rates and Doom Narratives” where I talk about, well I’m sure you can guess.

Anywho… this is the start of a short series of posts I’ll be doing on the dollar. In today’s note, we’re going to take a quick look at where we are.

In the follow-up pieces, I’m going to share with you my framework for analyzing hard currencies and we’ll talk about a thematic that I call “Core Domination”. It’s going to be the major driver of macro trends over the next 5+years so make sure to catch that one. And in the finale of the series, I’ll end by answering the question “is the US dollar at risk of losing its status as the world’s reserve currency” — to give you a hint, the answer is: NO.

Okay, so let’s begin by putting this “dollar crash” into perspective. It’s experienced a “devastating” “violent” “plunge” of *checks notes* … 10% from its cycle highs.

(Click on image to enlarge)

Looked at on a monthly basis it’s bouncing off the lower end of its 5-year long trading range. So from a technical standpoint, the Dollar Doom crowd might be getting a bit ahead of themselves.

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Disclaimer: All statements are solely opinions and are for educational purposes only.

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