USD About to Run into Some Trouble?

If the USD closes above 83.83 today it will register a 2-year closing high (genesis for this idea came from a Chris Kimble post yesterday, though his conclusion appears different).

And clearly, even if we fail to do this, it is very close to registering one anyways.

Dating back to 1987 this has happened 113 other times.

The chart below doesn’t include every case of this as it tends to happen in clusters (and it is time prohibitive to put every case on the chart) so we put lines where we have tended to get the first signal of it happening in a cluster and then the final one.

Visually, one can see it has historically tended to come after large USD rallies and/or tops. The last time the USD registered a 2-year closing high was in Oct/Nov 2008 during some of the darkest days of the panic.

Statistics also confirm the visuals – forward returns on the USD since 1987 after a 2-year high is registered are far worse than forward returns across all periods.

With some of our other posts recently re: gold and silver being in important flag/consolidation patterns on support and basic materials in general having been decimated in recent months, interesting things across all risk assets could be on the cusp of happening if this data set begins to play out and negatively impact the USD…

It sure would surprise a lot of people!

 

 

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