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US Dollar: Bull Market

DXY fell 0.72% last week and closed at 98.01 (below the 13-dma) after printing an engulfing bearish candlestick on Friday. 14-day RSI was unable to stay above its 20-dma during the previous week's rally and 3-day RSI remains below 80; bearish. Not surprisingly, DXY looks similar to the pattern in TNX - the interest rate on the ten-year treasury.

The March/April (and now December) highs near 100 are pivotal. Any breakout from there will be very bullish. A break of the Dec low at 97.21 generates an initial price target of 96.65.

The breakout from a triangle on the weekly chart measures a minimum move to 103.00. This should be the fifth and final leg up of the bull market. A strengthening Dollar is deflationary and bearish for equities.

Cycles tell us that the rally should continue into a final high in the first quarter of 2016. DXY is expected to then begin a bear market which will last until the second half of 2017.

US Dollar Index 10-Year Chart
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