USD US Dollar Weekly Chart; Sideways Funk; H&S Threatening; Dollar Moves Send Stock Market in Opposite Direction

The US dollar, dixie, the greenback, the Almighty Buck, is running the stock market show along with the AI orgy. Commodities jump on the weaker dollar (see the long red candlestick for last week) sending the stock market ever higher. Generally, stocks rise on the weaker dollar and equities fall on the stronger dollar although, comically, in recent weeks, AI orgy hype is overriding the dollar strength sending stocks higher. Thus, the melt-up in the stock market occurs.

The H&S pattern (blue) remains in play threatening a big drop in the dollar over coming months that would potentially (it's not that simple) help stocks. But price is resisting the failure at the neckline at 102 and created a second right shoulder. It can be jokingly dubbed the Quasimodo pattern. With a head at 114 and neck at 102, that is 12 points difference so taking away 12 from 102 is 90 for the downside target. If 102 fails and the dollar begins trending lower, the ultimate downside target is 90.

Note at how dollar price is lining out sideways along with the moving averages. The chart indicators also favor a multi-week sideways funk so the jury remains out on the H&S pattern. The ADX verifies the trendless market that staggers sideways like a drunk in Times Square last evening. The last strong trend (pink box) was in 2022 (last year) when the buck was moving higher. Of course, that upside trend was toast late last year. If the downside trend was strong, the ADX should have curled higher and be pushing up through 30; it's not. The dollar is in a sideways funk.

Let's drill down over the last month and see if we can gleam a direction out of the dixie chick. The second right shoulder hump over the last few weeks occurs with price printing matching or higher highs for 3 weeks. The thin black line shows the last price high and you can see that the negative divergence of the RSI and histogram create the spankdown conspiring with the USD daily chart that topped-out with neggie d.

So the dollar drops last week and here comes ECB President Madame Lagarde stomping on the greenback with her high heels. Lagarde's hawkishness elevates the euro and since the euro/dollar baskets are interlinked with about 60% or more holding each other's currency, the two move inverse. Euro up dollar down and US stocks receive another goose higher on the weaker buck.

The MACD, stochastics and ROC indicators are sloping higher as price makes its new high and are not negatively diverged. This hints that the dollar wants to come back up again for another look at those highs at 104-ish. It also reinforces the sideways choppy slop behavior. The stochastics are at the prior high (purple) but price did not make a higher high as compared to February/March. This hints that the dollar wants to come back up again.

The failure at the H&S neckline remains elusive and the dollar will keep you guessing. Bring up the dollar daily chart. You can see the RSI was possie d for the Friday bounce in the dollar but the MACD remains weak and bleak. The dollar needs a few days to bottom on the daily basis. This is interesting since the stock market is due to roll over and that would be in concert with the dollar gaining strength again. That may start anytime in the days ahead. As the dollar recovers on the daily basis, probably starting in the week ahead, it will be interesting to see if the AI orgy can override dollar strength again, or not.

Life is all about being a day late and a dollar short. The Story of My Life. 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.

Note Added Sunday, 6/25/23: USD tags 103.17 on Friday.