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Portfolio Perspective: Bullish Signals for the Dollar

John Kosar, Asbury Research

Near-term metrics remain positive for the U.S. dollar. There is a positive one-month rate of change in the U.S. dollar index and a bullish chart pattern in dollar versus the Japanese yen, with an unmet target 7 percent above the market. More intermediate-term metrics remain solidly negative, however. This is largely because of long-term overhead resistance in the dollar unlikely to be broken without at least a one-to-two-month corrective decline beforehand. In addition, there is an emerging near-term bullish bias in base metals prices and in gold, all which have historically been inversely correlated to the dollar. Expect to see a meaningful dollar correction sometime this quarter.

John Kosar is the director of research at Schaumburg, Illinois–based financial information services provider Asbury Research.

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