The DXY (USD Index) has exhibited remarkable strength over the past few years, generating significant market volatility as it surges and retraces.
The dollar’s inverse relationship with global markets—when measured against USD—is undeniable. On a broader time frame, we can clearly identify inverse correlations between stock market troughs and peaks seen in the dollar.
Presently, I believe the dollar has completed a substantial rally reaching a peak at the 0.618 retracement level of the 2022 uptrend, just above 109. This level has now prompted a rejection.
When I observe this type of price action, I immediately consider the potential for a corrective 1-to 1 move downward. In essence, this suggests that the second leg of the decline may mirror the magnitude of the initial wave, forming an equal-length corrective move.
By utilizing the trend-based Fibonacci extension, we can identify a projected local low around 95, with this timeframe aligning with November 2025. Interestingly, historical data suggests that bull markets frequently reach their peaks toward the end of the year, often around November or December.
Should this correction materialize, it would likely serve as a highly bullish catalyst for broader markets—potentially fuelling one last major rally before a more pronounced pullback.
The dollar’s inverse relationship with global markets—when measured against USD—is undeniable. On a broader time frame, we can clearly identify inverse correlations between stock market troughs and peaks seen in the dollar.
Presently, I believe the dollar has completed a substantial rally reaching a peak at the 0.618 retracement level of the 2022 uptrend, just above 109. This level has now prompted a rejection.
When I observe this type of price action, I immediately consider the potential for a corrective 1-to 1 move downward. In essence, this suggests that the second leg of the decline may mirror the magnitude of the initial wave, forming an equal-length corrective move.
By utilizing the trend-based Fibonacci extension, we can identify a projected local low around 95, with this timeframe aligning with November 2025. Interestingly, historical data suggests that bull markets frequently reach their peaks toward the end of the year, often around November or December.
Should this correction materialize, it would likely serve as a highly bullish catalyst for broader markets—potentially fuelling one last major rally before a more pronounced pullback.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.