The US dollar has been under increasing selling pressure all year, and just collapsed to its lowest level since April 2022.
When we look beneath the surface, the largest weightings in the DXY—namely the Euro, Yen, and Pound represent almost 83% of the index—and all three are threatening to break out of multi-year bases.
Analyzing the DXY in isolation is akin to evaluating the S&P 500 without considering market internals.
Due to the concentrated weightings in the index, DXY is always going to move in the opposite direction of these heavyweight currencies.
And right now, they are sending a very clear message about the dollar as they close in on textbook trend reversals.
The strength from these major currencies reinforces our...
