I’m Watching The US Dollar Index Today – Mike Swanson (03/17/2021)

Not much happened in the markets yesterday and much may not happen today either this morning. But this afternoon there will be an FOMC release and a lot of media anticipation over what they may say and Jerome Powell’s press conference afterwards even though they already leaked it all out Monday already. There will be no Fed rate hike and Powell will talk about a coming economic expansion, while saying that they have no plans to raise interest rates anytime soon and want inflation to go over 2% and stay there for awhile. The financial media and people who have to write about the markets have to make it sound like there is uncertainty and things are up in the air of what might happen in order to fill air time and say something, when nothing is happening.

It’s actually a dull market time.

What I’ll be watching, though, is what the US dollar index does by the close and for the rest of this week. As I noted last week, it is now overbought and in a position where it could start to drop again. Check out the UUP ETF, which tracks it.

The RSI for the US Dollar index fell below 30 in December to register an extreme oversold signal, much like it did in August. It then bounced and touched 70 last week to give an overbought reading. It’s now drifting. If it falls below $24.50 then it will have a breakdown. That doesn’t mean it will go straight down to new lows. It probably won’t, but more likely it will drift like it did in October and November before fading lower again.

One currency ETF I do own is the FXF ETF, which tracks the Swiss Franc. If the dollar fades expect FXF to go up.

Notice how the RSI for FXF fell way below 30 to give an extreme oversold reading. I see it as a buy with a stop loss order below $97.00.

There is more to the global financial system than the S&P 500, Nasdaq, and even the US dollar. There are world markets everywhere one can invest in and some have been outperforming the US market. I have positions in stocks in Germany, Turkey, and Russia and last week took a little dip into buying into the Asian markets with a position in the VNM ETF, which is an ETF for investing in Vietnam. I believe Vietnam is in a better position than China and Japan coming out of the global covid emergency of 2020 (only 35 people died in Vietnam of Covid) and so I took a small position in this ETF last week.

You can see how this ETF has been consolidating in the past few weeks. On Monday I bought ten stocks in my small Robinhood account. If you missed the post about them go here.

To share your own thoughts or ask a question just scroll on down to the bottom of this post to the comments section.

-Mike



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