The dollar index $DXY bounced off a major long-term weekly trend line and is now pressing into key short-term resistance levels.
The setup has echoes of the 2020/21 consolidation, when an extended period of range trading eventually gave way to a powerful breakout higher. Importantly, the dollar is also trading comfortably above its 50-week moving average, reinforcing the improving medium-term trend. A decisive move through the 100.5 area would strengthen the breakout case. After spending more than a year coiling inside the current range, a break higher risks creating a vacuum move as traders scramble to adjust to a regime shift in the dollar. Source: TME LSEG
The market is massively rebuilding one of the most powerful, but also one of the riskiest trades out there: shorting the yen
📉 Many investors are once again betting on further yen weakness, even as the currency trades near a very sensitive level around 160 against the dollar, and have built their largest bearish positions on the yen since 2017. ⚠️ Market now seems to see these risks as largely priced in. A BoJ rate hike is no longer a real surprise, neither is intervention from the Ministry of Finance. The yen can still weaken gradually from here but the risk of a brutal squeeze rises as bearish positioning keeps building. Source: Christophe Barraud, Bloomberg
The Fed expanded the money supply by nearly $9 trillion under Powell.
Inflation has averaged >4% per year over the past 6 years. Powell's explanation? It was nearly all due to rolling “supply shocks" over which the Fed has no control. The truth: this inflation was made in Washington as it always is - from too much government borrowing/spending and too much government creation of money. Source: Charlie Bilello
Turkish Lira falls to an all-time low against the U.S. Dollar
Now down 98% since 2010 Source: Barchart
Is there a trade here? Crude and the dollar have never been this positively correlated.
Source: Bloomberg, RBC
Japan's Ministry of Finance appears to be intervening in currency markets repeatedly:
The Japanese yen surged +1.8% in under 30 minutes during Asian trading on Wednesday, briefly touching 155.04 per US Dollar, the latest in a series of sharp moves consistent with official intervention. This comes after Japan's first intervention since 2024 on April 30, when Bank of Japan account analysis indicated authorities spent ~$34.5 billion to defend the yen. Meanwhile, Goldman Sachs estimates Japan still has enough reserves to intervene ~30 more times at this scale. The 157 level is emerging as the new line in the sand for Japanese authorities, with the Ministry of Finance warning speculators last week that "the timing for taking bold steps is nearing." Japan is desperate to prevent the Yen from weakening past 160 per US Dollar. Source: Bloomberg, Global Markets Investor
Those that claim the US dollar dominance is at risk or in decline, due to the Iran war, are completely wrong. The US dollar is becoming even more dominant in international transiations.
The US dollar's percentage of international transactions rose to a record 51.1% in March. The world is still betting on the USA as the world reserve currency. China is not an option due to capital restrictions. Europe is in economy stagnation and decline, so the Euro currency is not really an option. The "news" media is trying to sell a narrative, but the data is clear. The US dollar still dominates trade and it is growing, not declining. Source: Wall Street Mav Bloomberg
Dollar Use in Global Trade Rose to New Highs Amid War, Swift Says
Source: Bloomberg
