THE LIQUIDITY PARADOX: Charting the Macro Environment for 2025WEN QE !?
TL;DR there will be NO Quantitative Easing this cycle.
YES the markets will still go to Valhalla.
LIQUIDITY DRIVES MARKETS HIGHER. FULL STOP.
Global M2 has a highly correlated inverse relationship with the US Dollar and 10Y Yield.
Hence why we have been seeing the DXY and 10YY go up while Global M2 goes down.
THE SETUP
We are in a similar setup to 2017 when Trump took office.
M2 found a bottom and ramped up, which toppled the DXY.
Inflation nearly got cut in half until July 2017, where it then slowly started to creep back up as M2 and markets exploded.
To much surprise, all this occurred while the Fed continued to RAISE INTEREST RATES.
This was in part due to policy normalization with a growing economy coming out of the financial crisis and having near 0% interest rates for so long.
In Q4 2014, the Fed paused QT, keeping its balance sheet near neutral for the next 3 years.
As inflation started rising, QT was once again enacted, but very strategically with a slow roll-off in Q4 2017. This allowed markets to push further into 2018.
THE PLAYBOOK
M2 Global Money Supply: Higher
Dollar: Lower
Fed Funds Rates: Lower
10YY: Lower
Fed Balance Sheet: Neutral
Inflation: Neutral
TOOLS
Tariffs
Deregulation
Tax Cuts
Tax Reform
T-Bills
HOW COULD WE POSSIBLY WEAKEN THE DOLLAR?
Trump has been screaming from the mountain tops; TARIFFS.
Tariffs will slow imports and focus more on exports to weaken the dollar.
The strong jobs data that has been spooking markets and strengthening the DXY will be revised to show it’s much worse than numbers are showing.
The Fed will pause QT, saying it has ample reserves, but not enable QE.
At the same time, they could pause interest rate cuts to keep a leash on markets and not kickstart inflation.
Then once all the jobs data is revised and markets get spooked at a softened economy (Q2), they will continue cutting.
WHY DOES THE FED KEEP CUTTING RATES EVEN WITH A STRONG ECONOMY?
In short, the Fed has to cut interest rates for the US to manage its debt.
THE US government is GETTEX:36T in debt.
In 2025, interest projections are well above $1T.
That would put the debt on par with the highest line items in the national budget such as social security, healthcare and national defense.
The Treasury manages its debt by issuing securities with various maturities. When rates are low, they can refinance or issue new debt.
As rates rise, the cost of servicing debt increases, and vice versa.
It’s one of the underlying reasons why the Fed cut (but no one will say it out loud)…
hence why everyone is so confused and screaming that they cut too early and the bond vigilantes have been revolting.
HOW DOES THE MONEY SUPPLY GO UP IF NO QUANTITATIVE EASING?
We’ve seen this before.
President Trump and Treasury Secretary Scott Bessent have been telling you their playbook.
In 2017, deregulation and tax cuts led to an increase in disposable income from individuals and corporations.
Banks created more money in the markets through lending based on increased economic activity.
Global liquidity increased in other major central banks like the ECB, BOJ, and PCOB who were still engaged in QE, and / or maintained very low interest rates, which created more liquidity in the US money supply.
We’re seeing the same thing now with Central Banks around the world.
The tax reform allowed for the repatriation of overseas profits at a lower tax rate, which brought a significant amount of cash back to the US.
Like 2017, the US Treasury will increase short-term bill issuance (T-Bills), providing an alternative to the Reverse Repo (RRP), which reduces RRP usage. This provides liquidity to the markets because once the T-bills mature, funds can use the proceeds to invest in other assets, including stocks.
Banks will buy T-bills and sell in the secondary market or hold til maturity, where they can then lend the cash or invest in equities.
Another strategy to inject cash into the banking system would be standard Repo Operations. Here the Fed buys securities from banks with an agreement to sell them back later. This would increase lending and liquidity.
Hopefully now you can see why markets DON’T NEED QUANTITATIVE EASING !
That would for sure lead to rampant inflation (see 2021), and blow up the system all over again.
DXY
Daily Market Watchlist Analysis by Skeptic📊 Navigating the forex and crypto markets requires sharp analysis and timely decisions. Today, I'll break down my forex daily watchlist , analyzing key indices and commodities to uncover potential trading opportunities. Let's dive in, starting with the U.S. Dollar Index (DXY).
💲 DXY Analysis
Timeframe: Daily & 4H
Daily Chart: DXY has shown a strong bullish trend, recently rejecting the 110 resistance level and pulling back to a key support zone. There's potential for a bullish rebound towards 110, or even a breakout for further upside continuation.
Fundamental Insight : Current fundamental data shows balanced supply and demand, causing market indecision.
4H Chart: Five consecutive neutral candles suggest indecisiveness. It's wise to reduce risk exposure, limit the number of trades, and tighten stop-losses until a clearer direction emerges.
Trading Plan:
Bullish Scenario: If DXY breaks above 110 with momentum, look for USD long positions across pairs.
Neutral/Bearish Scenario: Stay cautious; avoid heavy exposure until the short-term trend clarifies.
🥇 Gold (XAUUSD) Analysis
Timeframe: Daily & 4H
Daily Chart: Gold is correcting after its primary weekly bullish trend. Following a three-wave correction, it has resumed an uptrend within a rising channel, now facing significant resistance at 2718. A breakout could signal early entry for a move towards the 2789 high.
4H Chart: The ascending channel is more visible here. A potential pullback to the 2693 support zone could offer a solid buying opportunity.
Trading Plan:
Set a Buy Stop near 2718 with a safe stop-loss below the previous low or 2693.
📈 S&P 500 Index (SPX500) Analysis
Timeframe: 4H
After a bullish impulse reaching 5980, SPX500 is undergoing a healthy correction, signaling strength in the upward move.
Watching for the RSI to revisit the 70 level and a resistance breakout for confirmation.
For aggressive traders, the 5928 support zone offers a potential buy opportunity.
Trading Plan:
Conservative: Wait for RSI to confirm momentum and a breakout above resistance.
Aggressive: Enter near 5928 with a tight stop-loss below the support level.
🚀Markets are showing signs of consolidation and indecision, making risk management crucial. Focus on high-probability setups and wait for clear confirmations before committing to trades.
Which market are you focusing on today? Share your thoughts in the comments!
✍️I'm Skeptic , here to simplify trading and help you achieve mastery step by step. Let's keep growing together!
US dollar index remains elevated, but for how long?The US dollar index continues to show strength and with the potential reduction in the amount cuts this year by the Fed, there might be further strength of MARKETSCOM:DOLLARINDEX . But could this be the case in the short-run? Let's dig in...
TVC:DXY
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DXY Is Going Down! Short!
Take a look at our analysis for DXY.
Time Frame: 1D
Current Trend: Bearish
Sentiment: Overbought (based on 7-period RSI)
Forecast: Bearish
The market is approaching a significant resistance area 109.133.
Due to the fact that we see a positive bearish reaction from the underlined area, I strongly believe that sellers will manage to push the price all the way down to 107.416 level.
P.S
Overbought describes a period of time where there has been a significant and consistent upward move in price over a period of time without much pullback.
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Dollar strength stopped as December CPI cools
The dollar retreated further as the deceleration in core CPI for Dec increased the likelihood of a Fed rate cut. According to the CME FedWatch, the probability of a rate cut in June FOMC rose to 67% from 57%. Richmond Fed President Thomas Barkin stressed that inflation is approaching the 2% target again and price pressures were continuing to slow.
Failed to hold EMA21, DXY consolidates near the 109.00 threshold. The index briefly broke below EMA78 and the trendline, indicating the possibility of a bearish transition. If DXY fails to hold EMA78 and the trendline, the index may fall further to the support at 108.30. Conversely, if DXY breaches above EMA21, the index could regain upward momentum toward the 110.15 high.
DXY could start correcting soonThe last quarter of 2024 was exceptionally bullish for the DXY, with the price climbing from 100 to a peak around 109—a substantial 9% increase in a relatively short period.
The bullish momentum has continued into the start of 2025.
However, since late December, the price action has become more overlapping, which could indicate the potential for a reversal.
At present, the price remains above the bullish trendline, so there are no clear reversal signals yet.
That said, it’s important to monitor for a downside break. If such a scenario occurs, the index could drop toward the 106 support level.
USDX, DXYUSDX is in an uptrend. The price has tested the 110.16 resistance and failed to break through. It is believed that in the short term there may be a correction. If the price can still stand above 107.41, it is expected that the price will continue to rise. Consider buying in the red zone.
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Please consider carefully whether such trading is suitable for you.
>>GooD Luck 😊
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Bearish drop?US Dollar Index (DX is reacting of the pivot which aligns with the 61.8% Fibonacci retracement and could drop to the 1st support.
Pivot: 109.402
1st Support: 108.50
1st Resistance: 110.17
Risk Warning:
Trading Forex and CFDs carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Forex and CFDs may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary.
Disclaimer:
The above opinions given constitute general market commentary, and do not constitute the opinion or advice of IC Markets or any form of personal or investment advice.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. IC Markets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
DXY STRONG UPTREND|LONG|
✅DXY is trading in an uptrend
Along the rising support line
Which makes me bullish biased
And the index is about to retest the rising support
Thus, a rebound and a move up is expected
With the target of retesting the level above at 110.289
LONG🚀
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My Current View On The 1hr With No ReasonI like what I have and I even sell what I have! 😮 I like dollars maybe I am just some American that thinks in dollars in my wallet..🤑.. Its all fun and Games Until you start losing your bag.💰..
"Count the coin not the dollars" I say to myself while listening knowing well I am my worst enemy. 🎶
In this market cycle it is out to bite you! Anything given will quickly look to take it back including you.. Nothing is a given be ready to fight and beg for what you hold back be it coins or dollars.....
"One coin to rule them all until there is wait two or three... Oh wait there's another one!!!"
YOLO Moonboyz 🌛 If you feel so inclined to do so.
🚽👄 Toilet Mouth: "Why do all your post say Short!?" or a bunch of "BUT, BUT, BUT"
⭐Not my job to tell you to buy or sell entries matter to most I only care about my exits.
⭐Let each person determine their cost to acquire and choice to play or not.
No Advice to give just thoughts that I can't shake after the last 8 years in the world of "CRYPTO"
Things 🤷♂️ #Fixed IDK!
🙏FOR JUST A HEALTHLY PULLBACK!
""KEEP CALM AND MANAGE THY RISK & BALANCE your Senses!""
I am The CoinSLayer 👨💻😈
You have been warned by The Coin SLayer!
P.S. Now witha bag!
P.S.S. well two or Ten
$USIRYYY -U.S Inflation Rate (December/2024)ECONOMICS:USIRYY
December/2024
source: U.S. Bureau of Labor Statistics
-The annual inflation rate in the US accelerated for the third consecutive month to 2.9% in December, as expected.
On a monthly basis, the CPI rose by 0.4%, exceeding expectations of 0.3%.
However, annual core inflation slightly decreased to 3.2% from 3.3%, below the anticipated 3.3%. The monthly core rate also eased to 0.2% from 0.3%, in line with expectations.
CRUDE OIL TO HIT $160?! (UPDATE):Oil prices have now broken above the trendline that started forming back in September 2023! We've seen a strong bullish rejection from our green support zone + trendline breakout.
Currently up 850 PIPS (12% ROI) in profit from our support zone. Keep an eye out because rising Oil prices will create havoc in the markets!
Gold 1H Intra-Day Chart 15.01.2025Gold has started the year of really bullish. But I see this as a liquidity grab, so my next step would be to look for shorting zones.
Option 1: Shorting at current market price towards $2,650.
Option 2: Once price reaches $2,650, next target would be $2,620 or a small retracement back up towards $2,680.
USD/CHF Wedge BreakoutThe USD/CHF pair on the M30 timeframe presents a potential selling opportunity due to a recent downward breakout from a well-defined Wedge pattern. This suggests a shift in momentum towards the downside in the coming Hours.
Key Points:
Sell Entry: Consider entering a short position around close to the breakout level. This offers an entry point near the perceived shift in momentum.
Target Levels:
1st Support – 0.9094
2nd Support – 0.9063
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Gold on high time frame
"When looking at Gold on the high timeframe, the price has been fluctuating between the $2600 and $2750 zones consistently. Valid Order Blocks (OB), inducements, and other patterns are observable on the chart. I predict that the price will finish its pullback to the mentioned zones. It's advisable to monitor candle formations closely for a good buying opportunity."
Bearish drop?US Dollar Index (DXY) has reacted off the pivot and could potentially drop to the 1st support.
Pivot: 109.38
1st Support: 108.53
1st Resistance: 110.17
Risk Warning:
Trading Forex and CFDs carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Forex and CFDs may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary.
Disclaimer:
The above opinions given constitute general market commentary, and do not constitute the opinion or advice of IC Markets or any form of personal or investment advice.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. IC Markets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
DXY for short-term DownsideHello Fellow Traders, Its BEEN A WHILE!
I hope That Everyone Follows This Forecast To make some big Profits!
Here is a Full Updated Analysis & Forecast For DXY
The Best way to follow my Analysis is if the following conditions apply.
Conditions -
1. Wait for the Market to Show you some (Rejection / Confirmation / Direction)
2.Wait for confirmation(Price Action Confirmation ( Pinbar , Bullish or Bearish engulfing / Break of structure Aka Support Or Resistance)
3.Do your Own analysis! (Draw Trend Lines / Support & Resistance Zones / SND )
4.Always Use Risk Management (Risk 1% of your capital)
5.Entry Should be Made on The 4H Timeframe (Only if you have Confirmation)
6.Trade at own risk!
&. Plan Your Trade & Trade The Plan!
Let Me know if you have any Questions or Comments Below!
Negative Or Insulting Comments Are Not Welcome
See You in the next Analysis!
Global Fx Education