USD US Dollar Index and SPX S&P 500 Weekly Charts

The consensus of the Wall Street Einstein's is that the US dollar will move higher. They are likely wrong again. All of you remember Keystone calling the top in the dollar at Thanksgiving due to the overbot conditions, rising wedge and negative divergence (red lines). The buck receives the neggie d smackdown in December into the new year.

The US dollar and the stock market are moving inverse to each other since the summertime which is not surprising. The weaker dollar sends commodities and oil prices higher so energy, oil, gas, ag and mining stocks catch strong bids which boost the broad stock market. Multinationals love the weaker dollar so the blue chips typically catch a nice bid. And visa versa. The dollar strengthens during October, November into early December and the stock market tanks. The last few weeks the dollar again weakens and the stock market stages a mini recovery rally with the jury still out on its sustainability.

The dollar is printing a 95-handle with resistance at the 20-week MA and 200-week MA at 95.8-ish. Support is at the 100-week MA at 94.53 Price may want to venture lower to tag the lower standard deviation band at 94.08; it's on the table.

The chart indicators remain weak and bleak wanting lower lows in the dollar after any bounce occurs in this weekly time frame. That hints the stock market will rally for a few weeks. The USD needs to back kiss those critical moving averages at 95.8-ish so a chop higher may occur for a week which is a dead-cat type bounce after a month-long collapse. The slight recovery in the dollar will create sogginess in the stock market but it should be short-lived, say for a few days, or week or so, and then the downtrend in the dollar will likely continue helping to lift the stock market.

There is likely lots of sideways ahead for the dollar this year which means lots of sideways for the euro as well. The US dollar and euro move inversely to each other since each basket holds about two-thirds of each other's currency. The dollar likely staggers sideways from here with a downward bias for the weeks ahead at 92-94 say a month or two from now (Feb-Mar). This would correspond to a stock market rally topping at this same time.

The stock market likely needs a strong and fast flush lower to honor the uber high NYMO so this few-day event will likely correspond to a short pop in the dollar probably to back kiss the moving averages above, and then the buck will likely roll over lower again.

The dollar rallied last year as the Federal Reserve hiked rates flapping hawkish wings but Chairman Powell has turned into a dove, they all do sooner or later, and is now riding around in the helicopter with Bernanke and Yellen dropping money from the sky. The dollar weakens as the prospect for higher rates and yields diminishes. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.