Just a quick attempt to lay out some war/conflict related events with the DXY chart.
US presidential inaugurations seem to mark a short term turning point for the dixie: https://www.tradingview.com/x/seHPRPYd/ However, with trillions in stimulus already announced by the president-elect, chances of USD strength in the comming months seem rather slim.
How would a military conflict/event affect the USD, though? Bush era invasions, nation destroying and rebuilding appear to coincide with a serious dollar downtrend. Obama era 'proxy' wars and regime changes appear to coincide with a strenghtening dollar. So if the US decides to attack and invade, say, Iran, we could reasonably expect a further leg down for the DXY.
Now, if the new government decides to continue the trade war with China, even escalate the war rhetoric further, could this surprisingly coincide with a DXY uptrend? Some say we are at support right now, so if the inauguration reversal is real and the new president respects the pamp, this could turn ugly rather quickly.
Interested in similar, or even more stupid ideas than this one.
Wow such a quality post deserved 100% my like and follow.
And for the next months isn't more likely we see a downtrend on DXY due to corona, stimulus...?
Kalchev
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@Willien, yes it is - that's the prevailing market sentiment as well. Everybody and their friends are majorly optimistic on risk assets due to the expected trillions in don't-point-out-we-rekt-your-livelihoods bribes, sorry - stimulus.
However, since DXY is weighted against a basket of other currencies, a weakening EUR could probably push DXY higher. As far as I can tell, Spain and Italy have already received part of their cake from the 750B EUR recovery fund handouts, though I haven't researched this into more detail yet. Here's the EXY index:
We could also see a prolonged circus in the US for the next stimulus bill, which could lead to a short term (inauguration?) reversal in DXY, as to my mind there's great potential for the US political class to keep dividing the nation further with more and new hysterical 'emergencies.' Warnings of a "Dark Winter" are yet to materialize, if they weren't meant to scare investors to reduce risk in the first place.
The SPX had its worst week since the elections (down 148 points) and it might just turn out that a correction is dead ahead with Wednesday's regime change under the guise of tens of thousands of armed national guardsmen and women.
I'm definately long-term bearish on DXY, but the case for a short-term rebound is there and could mean some serious turbulence ahead.
And for the next months isn't more likely we see a downtrend on DXY due to corona, stimulus...?