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Chart Of The Day Update:
The Dollar, Trust, And Stocks
Right now the Usd is entwined into the value of virtually every currency that is traded globally, because of the international trust that has been in place that the lender of last resort, the Fed, will honor the mountain of bills and notes that it is backing.
Trust, (or no alternative at the time that the gold standard was scrapped and the U.S. swapped gold for paper debt), that the owners of U.S. debt were forced to accept is now looking to be wearing thin as Wednesday sets up another push higher on regional currency values.
This is all about an oversold Usd with 75.00 on the dollar index is now pivotal, and as seen in U.S. trade, the markets are volatile as support/resistance is hit. It took positive equity markets and commodity trade to pull the dollar index higher to hit 90.00 in Nov 2008, and again in Mar 2009, with March being the time that the S&P hit the lows of 665. It has been all uphill since then for equities, and all downhill since then for the dollar.
Equity futures are moving higher, and looking to Wall Street for further long direction. The Usd and S&P are inversely correlated, negative stocks allow the dollar to go long, but as was seen overnight, the equity bulls are running with the dollar bears, and any move to stop that momentum is falling on deaf ears right now.
Crude Oil: Oil has an overbought trend, as a test of support at $79 a barrel now becomes pivotal. Look for a 4 Hour chart to hold under 79.00 to set up a test of 75.00, if equity trades pulls back.
Gold Bullion: Long overall trend, on all time-frames. Look for continued strength as a play against future inflation, after a test of 1040 support held well.