The U.S. Dollar Index has been mired in a correction for several months. During that time, stocks, gold and oil exploded higher in 2017 and early 2018.
But the greenback has put together a multi-week rally. Is the correction nearing an end?
Looking at the chart below, you can see that USD has traded in a wide channel since bottoming in 2008 (1). It tested a mid-point trend line early in 2018 (2) and reversed back higher. It is now testing it’s downtrend resistance line at (3).
A breakout here would be constructive for dollar bulls. And it could set the stage for a test of the upper channel resistance (1). Some consolidation is possible, here and bulls definitely would like to see a bull flag pattern develop – or an outright breakout.
However, if the dollar reverses lower, it could set the stage for a retest of the 2018 lows.
In any event, commodity bulls and bears and asset managers should keep an eye on the dollar in the weeks ahead.