The U.S. Dollar Has Officially Entered A New Bull Market

From Taki Tsaklanos: With yesterday’s rate hike by the US Fed, the dollar got a strong bid. Where exactly do we stand now, and is this meaningful in the bigger picture or not?

The short answer to this question is yes, the dollar move is very meaningful.

The longer answer is based on the chart setup. The weekly dollar chart makes the point. The dollar is not only trading at multi-year highs, after yesterday’s strong rise, it also broke through a strong resistance point (100 to 101 points, as indicated with the upper horizontal purple line).

Investors should not underestimate the importance of this. To us, it means that the dollar is now officially in a new bull market. After a consolidation of 2 years, it is now starting to move higher. In other words, this is the start of a new upleg.

This viewpoint is in line with our market outlook 2017. In it, we made the point that yields have still some upside potential. As yields are the leading indicator for markets, suggesting risk is on, it implies that gold and the Yen will be struggling in the foreseeable future. As a result of that, it ‘makes sense’ to have a rising dollar.

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The PowerShares DB US Dollar Index Bullish (NYSE:UUP) was unchanged at $26.37 per share in Thursday morning trading. Year-to-date, the largest ETF tied to the U.S. dollar has gained 2.81%.

This article is brought to you courtesy of Investing Haven.

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