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<\/figure>\n\nThe 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.<\/p>\n
The buck has quietly gained 3% over the past month.<\/p>\n
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.<\/p>\n
And, the rally is just getting started. It has plenty of room to run.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Best regards and good trading,<\/p>\n
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<\/p>\n
Jeff Clark
\nEditor, Market Minute<\/em><\/p>\n\n