Calling it a rally would be an exaggeration, but the US dollar index has seen a modest gain over the last several days and is currently trying to break above its 50-day moving average (DMA). Over the last six months, the 50-DMA has been acting as a steamroller for the index, rolling it over with every attempt at a rally. Given the fact that the negative correlation between the dollar and stocks is at historical extremes, a failure of the dollar to break above its 50-DMA would be a plus for stock market bulls.
Nice article.
The U.S. economy is improving and there are expectations for a positive GDP in 3Q09.
Therefore, I believe the U.S. dollar will strengthen even further from here, which may be one of the reasons upside potential for stocks is capped at 10.350 for a while.
See also http://invetrics.com
Posted by: Michael | August 18, 2009 at 06:04 PM