The CPI Release Showed SINY SIGNS OF TARIFAFAL PASS-HROUGH, but underlying Infrance Remains Mudted. It’s also becoming CLEAR that Exports, Importers, and Retailrs are absorbing a Significant PORTION of the Tarif Burden Ratter Than Passing It Directly to the Consumer, at Least for now. The Real Test Comes with the JULY and August Prints, where is price previouss are expanded to Build More Visibly. UNTIL then, The Fed Stays in WAIT-AD-SEEE MODE, Watching What This Soft Information Trend Holds or Finally Gives Way Under the Weight of Trade Policy. September Cut, Howver, is locked and loaded at this status of the game.
The us dollaar is quietly reassesting itelf —v with Fanfare, but with the resolution composure of a fighter who’s Taken a FEW Body Shots, Steadied on the Ropes, and now Sees An opening. After Three consecutive Closes Above ITS 21-Day Moving Average, The Dxy is no longer Flableing at Trend Lines –it’s leaning into them, stepping forward with a bit of tactical selfnce. The last time it attached this back in May, it is fet more like a dead-car bounce. But this time, the Tape Whispers Something Direction: This is not Weakness PRETENDING to Be Strength –it’s Weakness that’s Stopped Being Punished.
From a text Systematic Indicators, Those Cold, Mechanical Algorithms that Chase Momntum and Punish Softness, Have Started Easing Of Their Short-Dollar BIAS. It’s not quite a Buy Signal Yet, But when “Less Bearish” gets stamping ono a thoroughly carpet-bombed asset class, it’s offen the Market’s Way of Saying the Selling Has Exhaused ITELF. For Discretionary Traders, that’s when asymmetry lives: Not in Charasing Breakouts, but in Catching the Information Before the Models Do
Powering is part of the SETUP. CTAS, Having Ridden The Short-Dollaar Wave All Spring, are now left with sizeable Exposure. If the Dollaar Carves Out Just a FEW More Technically Supportive Closes, Those Same Ctas May Flip from Short-Covering to Chassing –SpeCially If Bond Vol Stays Grouded and Equits Remain Sticky Near the Highs. In other words, The Firewood’s Stacked; It would address Take Much to Light The Spark.
Jpmorgan’s FX Desk Strikes A More Tempored Note, Calling for Consolidation, Not Escape Velocity. That’s Fair. After all, when the Dollar Sheds 10% in Six Moths –as it just Did –it rarely Turns on a Dime. Historically, Those Moves Are Followed by Choppy Retracements or Grinding Range Trades. How, Those Reversals Are Often Deeper Than Expected, Particularlyly when Macroeconomic data dosn’t provide Fresh Bearish Fuel.
And here’s when the macro is starting to shift. Us Growth Momntum –on a Relative Laggard – Change Itelf Back to the Middle of the Global Pack. That May Not Sound Implementing, But in a World when germany’s economy is rolling in reverse and china’s stimulus English Misfires every other Week, Middle -f-TE-Pack Starts to Look Premium.
Goldman’s Q2 GDP Tracker AT +3.0% Annalized Pues The Us on Solid Footing, With Domestic DMAND Still Humming Even in the Face of Tarif Chatter and Election Noise.
More Telling, The Dollaar is no longer the Most Expective House on the Street. According to Valulation Models, It’s Lost Its Crown as the “Richest Currency,” with Several Peers Now Wearing that Dubious Title. Where the Dollaar is perceied as Cheap and more Currencies Screen Rich, It’s Another Good Reversion SETUP.
FED CUTS Are Still in the Cards, but Largely Priced in, The Dollar May Need A Hawkish Replicing to Find Support –it JUST Needs Less Dovish Disappointment.
Meanwhile, The Bloomberg and Wsj Editorial Chorus Has Resumed ITS DOLLAR DOOMSULLLING Searnade. Historically, that Kind of Connsusus Despair Off Signals a Bottom in the Dollar. The Dxy Rebounding of the Base of Its Long-TERM UpWard Channel Amid A Fresh Burst of Negative Editorial Headlines FITS That ContraRian Template to A Tee.
BOTTOM LINE: The Dollaar Isnt Roaring Back Yet, But it’s no longer loging. The price action has stabilized, positioning is lopsided, Growth is Resilience, and senteMment is as toxic as ever –a COCKTAil that’s not Screaming “Buy,” but it’s cortainly Whispering “Don’t be Short Over your skis.” Traders who have danced this rhythm before Know that it’s not always about the catalyst –it’s about the Absence of Fresh Reasons to Sell. In fx, that alone can be engrave for a turn.
