Is U.S. Dollar on the Hot Seat?

With U.S. corporate earnings under a bit of stress because of the relentless strength of the U.S. Dollar since May, 2014 (+21%), the $64,000 question is whether or not recent weakness in the DXY represents a near-term peak, and if so, will a correction in DXY positively impact GOLD? And how will a DXY correction impact the SPX?

My sense is that a meaningful correction in DXY will unnerve foreign holders of U.S. equities, who "until now" have benefited from both (Central Bank-induced) rising U.S. equity prices and a strong currency.

Perhaps perceptions will shift a bit toward thinking that U.S. equity prices are operating in an environment of a less-friendly Fed coupled with a weakening U.S. Dollar? What then?

Bottom Line: Since last Nov, spot GOLD has held up extremely well despite a near-vertical U.S. Dollar advance. With the DXY vulnerable to a meaningful correction, GOLD should benefit, and SPX should suffer at the expense of Dollar weakness.

  • Action-Oriented Trade Set-Ups in Stocks & ETFs
  • Macro Analysis of the Broader Markets
  • Detailed Technical Guidance for each Trading Idea
  • Live Interaction w/ Mike & Our Member Community
  • And Much, Much More!
Join Now! - Special Offer!
Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

Have Mike's “Out Front” morning analysis delivered FREE to your email inbox twice weekly!