This Rotting Corpse Just Jumped Up…

The dollar rally is gaining momentum.

You probably haven’t heard about it yet. After all, the dollar was given up for dead several months ago. And, nobody pays much attention to a rotting corpse.

But, when that corpse jumps up from the table and starts running around, folks take notice.

From the look of the following chart, the dollar has jumped up from the table. Take a look…

The US Dollar Index hit bottom last month right before the Fed lowered its target for short-term interest rates. Since then, the dollar has pressed steadily higher – making a series of higher highs and higher lows.

The buck has quietly gained 3% over the past month.

Of course, a 3% gain in a month is no big deal for artificial intelligence stocks, or semiconductors, or pump-and-dump Chinese biotechnology companies. But for a currency – and especially for a currency that was pronounced dead – a 3% gain in a month is a BIG deal.

And, the rally is just getting started. It has plenty of room to run.

The US Dollar Index is now trading above all of its various moving average lines. Those lines will provide support for the buck on any short-term pullbacks.

And, those moving averages have morphed into a bullish configuration – with the 9-day EMA above the 20-day EMA, and the 20-day EMA above the 50-day MA.

The chart showed a similar setup last year, just before the dollar index rallied 9% in a little over three months. A similar move this time around will have the index trading near 105 by New Year’s Day.

Last year’s rally in the buck also occurred as the Federal Reserve was lowering its target for short-term interest rates. So, it shouldn’t be much of a surprise that we’re seeing similar action in response to the Fed easing rates this time around.

Best regards and good trading,

Jeff Clark
Editor, Market Minute