US-DOLLAR (DXY) at Support!..Analysis

Hey tradomaniacs,

DXY (US-DOLLAR-INDEX) is currently re-testing the primary trendline aswell as support-zone.

Question is will it hold or not? I can tell you it is tricky due to the new expectations the market prices in in uncertain times.

What do we need for a bullish US-Dollar?

1. Risk-Off in stocks
2. Rising Yields / Falling Bonds

Fundamentals:

So far the market has reacted to different circumstances such as the Ukrain-War but first and foremost the inflation and the answer of our Central Banks.

The market has never seen such a shift in monetary policy and multiple rate-hikes in this dimension. This is of course very concering as the Central Banks (Drug Dealer) takes away all the drugs (liquidity) the market is addicted to.
Since the Corona-Rally is based on money-print-waves aswell as low rates it was more than clear that we get a bear-rally with the annoucement of Biden to fight inflation, no matter what it takes. (Ofc as it was his promis to biden to get a second period)

However, now we have a scenario where the world is getting concerned about all the rate-hikes and their impacts. The first very critical situation appeared in the UK where Central Banks were forced to adjust the monetary policy.
Now we have seen a lower rate-hike in Australia...this could become a "trend" of the CBs as they could take a step back and wait for the impact of recent rate-hakes.

Trends like that can be quickly priced in the market...

Yesterdays ISM-Results from the USA caused a pump in stocks as the market begins to bet the FED won`t come up with such high rate-hikes as announced to support the obviously slowing down economy. This is again a BET against the FED and Jeromes statements. I guess the market will look at the NFPs this week to evaluate whether it is more likely to get the promised rate-hikes or not.

A decent job-market could give the market the impression that rate-hikes as planned are possible and we see a rising US-Dollar.
A worse job-market could confirm the markets expectations (as economy aswell as jobmarket suffers) and we see a falling US-Dollar.

Technically a great spot to go long but as long as SPX&Co continue to move up we will see a weaker US-Dollar.

In Mid-term I expect the US-Dollar to rise again as recession is coming closer and closer (See Yield-Cuves).

What do you think?