$DXY about to hit THE WALL?
If you have an affinity for gold, stocks, or real estate, then today might just bear some exciting news for you. The US Dollar Index (DXY) is marching towards what might be a monumental resistance level at 115. When we take a closer look at the WEEKLY timeframe, we encounter two significant barriers. Firstly, there’s a major resistance line stemming from the historic 1985 high of 160, illustrated in yellow. Joining this, a triple top high of 118 witnessed during the early 2000s, also highlighted in yellow, compounds the barrier. Currently, the DXY is navigating the bottom support of 104 within a rising channel, adding another layer of intrigue to its trajectory.
In terms of fundamentals, there’s a looming pressure on both the Federal Reserve and US fiscal policy to dilute the dollar’s strength. Such a strategy aims to enhance exports and boost the Gross Domestic Product (GDP). This implication suggests that inflation is far from retreating. Any attempts at rate cuts could exacerbate the situation, akin to pouring gasoline on an already raging bonfire.
Enthusiasts of the dollar milkshake theory might find themselves taken aback as the appeal towards the dollar begins to wane, making way for harder money forms such as gold. These assets are increasingly playing a pivotal role in sovereign bank collateralizations and addressing trade imbalances. The prevalent assumption that the US dollar will continue to outshine other currencies within a collective of underperforming options is likely to be challenged. As we edge closer to the end of the decade, the emergence of multipolar alternatives and a growing acknowledgment of the US debt as irreparable—in terms of today’s dollar value—could significantly alter the financial landscape.
This shift is expected to generate substantial momentum for all anti-fiat assets, with gold taking the lead. Cryptocurrencies like Bitcoin are also predicted to flourish under these conditions, alongside any stock that boasts pricing power. The real estate sector is poised for success, particularly as foreign holders of US treasuries, such as China, India, and Japan, might opt to invest in US residential and commercial properties rather than settling for insignificant yields on fundamentally unsound debt instruments.
In essence, as the DXY approaches this critical juncture, its outcomes could very well redefine the value propositions across a wide spectrum of investment vehicles. For aficionados of gold, the stock market, and real estate, these developments herald a period of potential prosperity and enhanced asset valuation, driven by evolving global economic dynamics and shifting policy measures. The journey of the DXY and its imminent encounter with historic resistance levels is more than just a numeric threshold; it signifies a potential turning point that could very well resonate across the entire financial ecosystem.
