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Should the US Dollar Be Stronger After Fed Vice Chairman Fischer's Speech Sunday?


Off of last Thursday’s (Aug 18) low at 94.08, which we notice managed to preserve the May-Aug support line, The Dollar Index (DXY) has climbed to this morning's "Stan Fischer" high at 94.95, a bounce of 0.9% so far.

Should we consider the bounce significant, or commensurate with Fisher's pronouncements about an improving economy and climbing inflationary expectations?

Purely from a technical perspective, this morning's "Fischer bounce" appears to be evaporating, as DXY now is down on the session, $0.50 from the high.

Bottom Line-- the upmove from Thursday DXY low appears to me to be a brief pause within the post July 25 downleg from 97.57 to 94.08, which if accurate, argues for a forthcoming retest of the recent low-- and the May-Aug support line, which must contain the weakness to avert a potentially significant downside follow-through to test multi-month support at 93.00-92.00.

It appears to me that DXY just might be doubting Vice Chairman Fischer's optimistic outlook, which should not give international investors a warm and fuzzy feeling either about the efficacy of the Yellen Fed, or the other Central Bank's ability to produce growth and inflation.

Let's watch DXY closely in the upcoming hours and days, as we head towards Jackson Hole.

It might provide clues about the investor perceptions about the diminishing influence of the Central Bankers, and a reassertion of the markets as the weather-vane for forthcoming monetary policy prescriptions-- mo' money, mo' money, mo' money... and higher precious metals?

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