Title: U.S. Dollar Shows Signs of Strength with First “Golden Cross” Since July 2021
Subtitle: Analysts optimistic about the dollar’s uptrend, but caution against potential challenges for stocks
GUAM – In a positive development for the U.S. dollar, the currency recently completed its first “golden cross” since July 2021, indicating a potential uptrend for the greenback. The golden cross occurred when the 50-day moving average on the ICE U.S. Dollar Index DXY surpassed the 200-day moving average, suggesting momentum building in a favorable direction.
The index concluded the week at its highest level since March 10, 2023, after recording a 0.2% increase. This achievement has sparked optimism among analysts, who believe that the dollar’s recent gains could mark the beginning of a larger advance, similar to previous golden crosses.
Interestingly, the dollar had experienced a “death cross” on January 10, which initiated a downtrend that persisted for the next six months. However, with the Federal Reserve forecasting interest rates to remain above 5% through 2024, expectations for the dollar’s uptrend have been bolstered.
According to historical data, the dollar typically experiences further climbs in the three months following a golden cross, with an average gain of 1.9%. This promising statistic adds to the positive outlook surrounding the currency’s resurgence.
While market sentiments lean towards a stronger dollar, some analysts caution that its advance, coupled with rising Treasury yields, may present challenges for the stock market. This concern materialized on Thursday, as the S&P 500 recorded its largest single-day drop since March 22.
Nonetheless, for the U.S. dollar, the golden cross heralds a potential period of strength. Market participants closely monitor these technical indicators, and the recent development has piqued the interest of traders and investors alike. As the dollar continues its upward trajectory, financial observers eagerly await its performance in the coming months.
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