The US dollar is trending higher as the world’s main reserve currency
The U.S. dollar is a market that continues to stand out as a stronghold for traders and investors, says Chris Vermeulen technical traders.
The world’s first reserve currency, the USD (DX-Y.NYB), remains solidly above all other major global currencies.
As we enter summer, stock market indices have not only been volatile, but continue to decline.
Commodities, metals and energy seem to dominate and experience a distribution.
Cash is king as traders now value liquidity. As losses mount and capital evaporates, traders liquidate many different assets to meet margin calls and raise needed liquidity.
Going for the money and grabbing what’s left is a survival strategy. It has many advantages providing peace of mind as well as the future potential to generate significant returns down the road. If a trader does nothing and their capital continues to evaporate, it can be fatal to a trader’s overall attitude and hamper their ability to generate future profits.
Markets go up and markets go down. What makes the big difference is how we manage risk and how closely we follow the direction of price. Knowing and controlling one’s emotions dictates how long we can play the game or how well we will succeed.
Now is not a good time for traders to become complacent or ignore their basic principles of money and risk management.
US Dollar 14-Year Uptrend
- The US dollar rose 14.28 years from 2008 to 2022.
- US presidential cycle 2012-2016: USD appreciated by +37.20%.
- US Presidential Cycle 2016-2020: USD depreciated – 12.80%.
- US presidential cycle 2020-2022: the dollar has appreciated by +17.35% to date.
- US Dollar New 14-year high.
US DOLLAR INDEX • DXY • CAPITALCOM • WEEKLY
US Dollar ETFs (UUP) +16.96%
- Jan 6, 2021, to date USD ETF UUP +16.96%.
- Pullbacks or corrections have generally been 3-4%.
- Withdrawals or corrections usually lasted 20 to 50 days.
- Price target extensions for potential resistance are at $36, $42, and $48.
INVESCO DB USD INDEX BULLISH FUND ETF • UUP • ARCA • DAILY
US Dollar Indices vs. US Stocks
- Percent Comparison Chart: US Dollar ETFs vs. US Equity Index ETFs.
- Period: January 6, 2021, until today.
- 372 bars, 539 days, 77 weeks, 17.9 months or 1.47 years.
- +10.65% USDU ETFs: Wisdom Tree Bloomberg US Dollar Bull Fund (USDU).
- +2.75% SPY ETF: S&P500 (SPX).
- +2.61% ETF DIA: Dow Jones Industrial Average (DIA).
- -8.15% QQQ ETFs: Nasdaq 100 (QQQ).
- -12.01% ETF IWM: Russell 2000 (IWM).
- The maximum spread is 22.66% (+10.65% USDU against -12.01% IWM).
- The prediction is that the spread will continue to expand.
WISDOM TREE BLOOMBERG US DOLLAR BULLISH FUND • USDU • ARCA • DAILY
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