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Dollar Index Strength is Powering the Financial Markets Higher in Anticipation and in Preparation for Another Fed Rate Hike


The Canary in the Coal Mine yesterday, today, and probably into Fed Chair Yellen's speech on Friday morning, is the US Dollar, which has been grinding higher since its bear-trap low at 91.92 on May 3 into the 95.50 area, a three week push of 3.9% precisely at a time when investors were expecting a dollar breakdown after weeks of Fed vacillation about and back-pedaling on one more 2016 rates hikes.

However, during the month of May in general, and after the April FOMC Minutes were released on May 18 in particular, perceptions about a rate hike have rocketed.

The tip of the spear has been US Dollar strength, which appears to be convincing and preparing the financial markets, and investors, for a June or July rate hike.

Apart from the negative implications of a rising USD, The Dollar Index (DXY) is poised for a challenge of very important resistance between 95.50 and 95.90, which if hurdled, could send the Dollar rapidly higher.

Only a break below 94.60 will neutralize the positive DXY set-up.

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