We talk about dollar index or index of the value of the U.S. dollar in relation to a basket of foreign currencies:
– Weight about 57% Eur
– Weight about 13 Jpy
– Weight about 12% Gbp
– Weight about 9% Cad
– Weight about 4.2% Sek
– Weight 3.6% Chf
It ‘s been a while that we think of a decline in the dollar index, after having recorded new highs since 2017 just in mid-February in the 99,815 area, close to 100 points. Despite this, the end of February created a lot of uncertainty and volatility, leading the dollar index to reverse decisively.
The cyclical analysis supports our view of potential decline in the medium term. Analyzing the chart, we can see how we have entered the final phase of the cycle (i.e. bearish) with the 9-year-old cycle (red curve line) and the intermediate cycle (green curve line) that will potentially move in the same direction (bearish direction).
Future medium targets set in zone 90 and 85 points.
Connecting to non-ferrous metals, it is easy to see how a weak dollar can encourage an increase in raw materials in general (without taking into account exogenous factors) but it is certainly a positive factor. One thing is certain is that if the non-ferrous metals were to fall, it will certainly not be the strength of the U.S. dollar to push them down but a strong weakness in the non-ferrous sector.
DOLLAR INDEX – MARCH 2020 CONTRACT – MONTHLY CANDLES