Final Rally in the Dollar
DXY gained 1.46% last week to close at 95.65 back above its 34-dma as well as its mid-June reaction high (a higher high) giving hope to the bulls that the final rally is upon us. Despite the bearish seasonality of July, cycles indicate that the Dollar is set for one "last hurrah" prior to a "summer swoon" a month from now.
Cycles target a turn near July 24 and are a good match for the cycle low in TNX (yield on the 10 year US Treasury note) expected then. A 40 week cycle low is expected in late Sept (similar to cycle high in TNX) but an annual cycle shows a low in Feb and is a better match with a 3yr cycle.
Short-term cycles this week are a bit difficult to read but a close below Thursday's low at 95.26 will convince me that the trend, until closer to July 9, is still down.
A symmetrical triangle on the monthly chart measures a minimum move to 102.00 which is the 61.8% retracement of the 2002 bear market. 102.00 is also a 127.2% retracement of the Apr/May decline.
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