The Top In The U.S. Dollar Is In. Where To From Here?
(Click on image to enlarge)
Japan 10-year bond yield courtesy of Trading Economics
The BOJ lifted the ceiling to stop an unwelcome slide in the yen. In response, bond yields also jumped in the US.
US Treasury Note 10-Year Yield
(Click on image to enlarge)
US 10-year bond yield courtesy of Trading Economics
For the first time in a decade, all major central banks are tightening, with Japan still doing the least.
Long term, I doubt this rather pissy move by the Bank of Japan will do much of anything to US treasury yields. But what about the dollar?
US Dollar Support Levels
On the monthly chart, there are strong support levels way below at 90 and 80.
A weekly chart shows additional support zones.
(Click on image to enlarge)
US dollar index weekly chart courtesy of StockCharts.com annotations by Mish
The US dollar is right at support. I do not expect much of a bounce here if indeed any.
There is minor support at 101 and much stronger support at 95. Given both monthly and weekly support at the 90 level, that is a good spot to bet on reasonable bounce in the dollar.
UDN US Dollar Index Bear Fund
(Click on image to enlarge)
US dollar index Bear Fund chart courtesy of StockCharts.com annotations by Mish
Dollar Fundamentals
- Deficit spending in the US is totally out of control.
- Rising treasury yields will consume increasing amounts of tax revenues
- The Fed is giving away billions of taxpayer dollars in free money to banks.
- US housing market is collapsing
- Corporate earnings are falling
- Consensus earnings are still too high
- The US stock market is still insanely overvalued, even on a relative basis to the rest of the world
- The US pace of tightening is slowing while tightening elsewhere rates to catch up a bit.
In short, US dollar fundamentals stink.
This may not be the best entry as the dollar is right at support but UDN is worth considering here or on a bounce.
Understanding Long Term Moves in Gold, What's Going On?
Also consider Understanding Long Term Moves in Gold, What's Going On?
More By This Author:
Housing Starts Flat In November But Permits Unexpectedly Collapse By 11 Percent
NAHB Housing Sentiment And Present Conditions Crash To Covid-19 Lows
EU Imposes The World's Largest Carbon Tax Scheme, Inflationary Madness Sets In
Disclaimer: Click here to read the full disclaimer.
Comments
