$DXY – Technical Chart

November 1, 2021

Waking Up the Dollar

With FOMC meeting this week, expect $USD to catch a bid and push much HIGHER this month.  The devaluation theme will likely ease now that QE taper has become a long awaited reality.  With tightening policy, FED hawkish = $USD bullish.  China’s debt crisis may be contained for now but still fluid, unresolved.  Expect to see volatility turned up this month with systemic issues like this and supply chain still lurking.  The bond market is wonky, with short-term yields popping higher while long-term yields not following.  This is resulting in a flattened yield curve. All this portends policymakers will likey make “micro-hikes” to interest rates so as not to disturb an already weak economy.  Fully expecting equity indexes to push higher into end of year.  The law of diminishing returns in full effect for traders/investors who have crushed it all year staying bullish equities.  We are at the end of a policy cycle, and longer term investors will likely take profit at Q4 end.  Upside target is 98.25 into end of month. 

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