$DXY to 100 and heading lower, bullish for $EURUSDTVC:DXY the dollar index, was the primary driver of the equity bear market in 2022. With TVC:DXY hitting a 5 year high of 114 marked the bottom in AMEX:SPY and $QQQ. The recent strength in TVC:DXY was out of stock with TVC:DXY and Stock markets rising at the same time and dropping when the TVC:DXY is falling. Usually, the risk assets have an inverse correlation to the US Dollar index. These periods in history are unusual and are marked by some kind of macro events like recession etc. With tariffs discussion everywhere that might not be unrealistic to expect some kind of recession.
In that case where is the TVC:DXY headed? Currently the TVC:DXY is at a psychological level of 100. Once it breaks below 100 the next stop might be 95. If we see some kind of soft recession which is my worst-case scenario then we might see the lows of 90 in $DXY. If TVC:DXY goes down by 10% or lower than we can expect to the FX:EURUSD to go back to its recent high of 1.23.
Verdict: Short TVC:DXY ; Long FX:EURUSD , AMEX:SPY and NASDAQ:QQQ
