DXY: Dollar Index Trims Weekly Gains in Half. Is the Reversal Finally Coming?

“Is it happening, finally?” – dollar bears, probably, as the US dollar flashed its first signs of weakness in months.

• The dollar index DXY erased more than half of its weekly advance on Thursday and early Friday but is still on track for a weekly gain, its 11th straight one, of just under half a percent. A shifting market sentiment narrated moves across the board yesterday and the prevailing market theme today is ‘cautious optimism.’
• A slight retreat in the US dollar led to rising valuations of rival currencies such as the euro, the pound and the Japanese yen. Tie that forex dynamic to an uplifted stock market, a jump in Bitcoin and crypto assets and you’ve got a market excited about growth prospects.
• In other words, investors ditched the safe-haven allure of a dollar in a high interest-rate environment. And opted for risky assets, brushing off inflation concerns, at least another rate hike this year, a worsening $33tn US debt and a budget battle between legislators that once again threatens to shut down the federal government.