Another 48h - 4th Rising Day In DXY Also After US Inflation Data

2024/12/11
Another 48h - 4th Rising Day In DXY Also After US Inflation Data
“us inflation is in line and/or rising for the third time in a row!
will the usa falls back into an us stagflation in this quarter?”



After the announcement of inflation figures, technology stocks shot up again on the US stock market on Wednesday. The NDX , which is dominated by tech stocks, rose to a record high and recently gained +1.41% to 21,670 points. AMZN , GOOGL , META and/or NFLX climbed to new all-time highs, while TSLA narrowly missed a new record. The market-wide SP500 rose by +0.68% to 6,076 points. Things are looking a little worse for the leading index DJIA at -0.10% to 44,205 points. Market participants initially focused on price increases in the USA in November, which, as expected, increased somewhat. But the fear of another inflation bubble is currently not present among all those involved - me too. On the contrary - the stock market seems to be setting itself up for a soft landing scenario. So here's to growing out of US stagflation - without a recession. In other words, the US GDP should of course be higher as the US inflation under Donald Trump's watch than under Biden & Harris's direction. Which is why, for better or worse, the rise in today`s US inflation from +2.6% to +2.7% should not dissuade anyone, including me, from giving up the expectation that the Fed will cut interest rates by 25 basis points in a week. Just like the ECB tomorrow. Although I had different expectations in the summer of this year 2024 - and would have held them until the end of 2024. Because the danger that the FED, let alone the ECB, will lower your interest rate too early (in the case of the FED) or too late (as in the case of Germany, but not the other euro countries) still exists - and why a renewed flare-up of inflation in 2025 is not off the table. But I don't want to bring it up today either. Because the key interest rate is still well above the inflation rate. In both cases. Which is why the monetary policy is understandable - but it could have taken its time until the second half of 2024. Because if we see another inflation gallop away tomorrow, i.e. in 2025? Then we already know why today! Nevertheless, the USA is in a comfortable situation when it comes to the stock market and/or the economy in our so-called West. And it's the best of all worlds, in our so-called West - which is why, to my surprise, the DXY is also rising today. While the US yield curve - including the US10Y - fell slightly.

• Will the bulls recapture the terrain above 106.517 points again?
  
• Will the bears recapture the terrain under 104.447 points again?
  

Those were the two questions last calendar week - to learn something! And what have we learned? Both bears and bulls were not that strong. Looking back, I may have to admit that, for better or worse, I defined the price action a little too far apart. But I think we should give ourselves time until 2025. Even until January 20th, when Trump is officially back in the office. Because then the cards are shuffled again as far as the price action is concerned. And until then, we should continue to be content with the same question. Because the price action between 107.348 points (Annual Year High 2023 from 2023/10/03) and/or 106.517 points (1st Annual Year High 2024 from 2024/04/16) are groundbreaking. Last week before the bears took over. pathbreaking for last week, and/or this week after DXY closed at 105.970 points this weekend, after last weekend 105.782 points. Which is why it looks like we will see a DXY down to 104.447 points from Friday, the 2024/08/02.

““The world order needs a major overhaul.”
George Soros

• Will the bulls recapture the terrain above 106.517 points again?
  
• Will the bears recapture the terrain under 104.447 points again?
  

It looks like we will see a DXY down to 104.447 points from Friday, the 2024/08/02 because a price action until this price action zone and/or even below is definitely within the scope of probability. Because looking back, between the annual highs of 2024 and/or 2023, we can now see something like a bearish trend reversal formation in the DXY chart. Admittedly not as big as the bullish trend reversal formation - but at least a bearish counter reaction to the previous bullish one. And this could send the DXY even until around and/or down under 104.447 points from Friday, the 2024/08/02. When fears arose in the financial market that the US unemployment rate would skyrocket, the Fed would have to cut interest rates to prevent an US recession, and as a result, US inflation would inflate again - and we were nevertheless cyclical as history tells us still fall into a US recession. However, will it happen? It will be like it will be! And/Or allow me to use the words of El-Erian: “Fed Will Be Comfortable Cutting Rates”, as you can hear on Bloomberg Surveillance Podcast, from last Friday, as the last US unemployment rate came out.


108.071 : 2024/11/22 - Annual Year High 2024
107.348 : 2023/10/03 - Annual Year High 2023
106.517 : 2024/04/16 - 1st Annual Year High 2024
106.490 : 2024/05/01 - 1st False Breakout To New High
106.130 : 2024/06/26 - 2nd False Breakout To New High
106.641 : 2024/12/06 - last price action
104.799 : 2024/07/30 - High Before W Trend Reversal Formation
104.426 : 2024/08/02 - High Of The August 2024 2 Day Sell-Off
102.160 : 2024/08/03 - Low Of The August 2024 2 Day Sell-Off
Be that as it may, today`s US inflation data was and is coming out in expectation so we can assume that tomorrows PPI data may also come out within the framework of expectations. So the current short-term trend of the last few days, in terms of price action, is also likely to continue for the rest of the week. Which is why I pay a lot of attention to the price action areas mentioned above, because I assume that we will move bullish or bearish in one of the two directions. And after that week, it seems like that we should slightly go further until 107 points and/or 108 points until the end of this year 2025 as back into the big w trend reversal formation to 104.426 points and/or deeper until 102.160 points.But let's wait the tomorrows PPI data first.


With best wishes
and with good intentions!
Aaron



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