DXY to Move Higher? transcript

Hey everyone, and thanks for jumping back into the Forex First. Today, we're going to talk about the US dollar currency index, one of the most riveting topics for everyone here. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on ITC premium. Link is in the description below. Also, be sure to get your ticket to the first Investing Through the Cycles conference taking place November 21st.

Let's go ahead and jump in. So, my views on the dollar remain unchanged. I would be willing to pivot my view if the Fed is unwilling to raise rates. However, I think that the Fed will raise rates again before the end of the year. I do. And I think there's a chance they might do it as early as September. And that's not really a contrarian view at this point for the Fed to raise rates. I mean, as of right now, again, I'm going to be traveling for the next like week and a half or so.

It's currently September 9th. You're probably watching this video like many, many days from now on the public channel. But, the odds as of September 9th for a rate hike are 60%. If the Fed were to follow through with this and actually raise rates, I think you're going to see the dollar bounce and head back up. Now, if you zoom in to the moves by the dollar over the last couple of lows that have formed, you'll see there's a pattern, right?

It sets a low, it rallies, it comes back down, and then goes higher. Okay, again, look. Sets a low, rallies, comes back down, and then goes higher. Same thing, right? Comes down, rallies, back down, higher in my opinion. This is what I think's going to happen. By the time you're watching this video, maybe gold or sorry, maybe maybe the dollar is no longer at 98. You know, I don't know what it's going to be by the time I release the video, but I'm trying to just pre-record a few videos just so there's something that I'm putting out while I'm traveling.

And things like the dollar don't tend to be nearly as volatile as other assets like Bitcoin because Bitcoin's moving, you know, very very very quickly sometimes and so it's harder to make videos on it when I'm going to be gone. So, the dollar, the path to me is to head back up. Okay? We've talked about this before. If you look at the the dollar during Trump's first term and his second term, it's basically the same path so far, right?

Down for the first year, consolidate, and then start heading back up. And we also had a drop in the dollar around this time during Trump's first term and you can see that it was only that was on we're on day 597 indexed to when the administrator or the new administration in 2018 the dollar started going up on day 608. And it went up into the end of the year. I think the same thing's going to happen. Now, if you were to overlay interest rates onto the chart for the dollar, right?

What you'll notice we zoom out here. What you'll notice in 2018, late 2018, we also got a rate hike or two. But, it was different because we were in the middle of a rate hiking cycle. But still, the dollar was going up. What's more accurate in my opinion to compare to is not 2018 in this case, but to go back in time and find a rate hiking cycle followed by a pause followed by a cutting cycle, and then what happened when interest rates went back up.

That's what you should look at. Not 2018. So, the 1990s is our example. Look at what happened. We had the rate hiking cycle. We had the rate cutting cycle. Fed funds rate remains constant. And then we got a rate hike. And you can see on that rate hike and and right before the rate hike occurred, the dollar started to explode higher. You see that? It was at like 90 91 just before the rate hike. And and about a month or so after the rate hike it was all the way up at 97.

And it actually continued to go up until the Fed cut rates again. So, I think the most likely path for the dollar is what I'm about to draw. Something like this. It finds a low. Sorry. I need to do the uh It finds a low. It rallies. Comes back down. Something like this. But then eventually heads back up here. And then from there you might see it get rejected again. Something like that is what I think will play out for the dollar.

Now, if the dollar were to take out all these lows, then I might have to reassess. This pattern does somewhat look like the Bitcoin dominance pattern to me uh from from the prior cycle, right? So, if you go look at at Bitcoin and you're like, "Why is he Why does he always work in Bitcoin dominance?" Well, if you look at at Bitcoin dominance in um you know, over here, there was a period where you had three lower lows and then you had a fourth slightly lower low and then we were back in business.

The reason I don't think this is what's going to happen and that I think it'll be a higher low instead is because this included stable coins, and if you exclude stable coins from the Bitcoin dominance chart, which I think is a relevant exercise to do in order to truly measure like, you know, what it is we're we're actually trying to measure, um you'll you'll see that it actually looks completely different, right? So, when you look at it like this, you'll see that it was a higher low.

Consolidate and move up. So, I think the dollar will find a low soon, and then it'll move up into the rate hike, and then likely continue to move up until the Fed cuts rates again. And what that means is that the dollar is likely going to come back up to this trend line. So, it'll probably tag it, you know, maybe in 2027 or 2028 around like 104. 104, 105 seems about right. So, that's what I would look for for the dollar.

Gold is already sniffing out this weakness, right? Gold's already going down right now to try to find a low that's and maybe even a higher low to to print. And I I think the reason gold has been struggling the last few weeks is because it knows that this rise in the dollar is about to start. So, that's my view on the dollar. Uh if you guys like the content, make sure you subscribe to the channel, give the video a thumbs up.

Um and again, check out the sale on ITC Premium at intothecryptoverse.com. Would love to see you guys at the first Investing Through the Cycles conference taking place in Miami, uh the week uh the weekend of November 21st. I will see you guys, hopefully, there. Bye.