Dollar Index and Gold Price Action Indicate Renewed Easy Money Perceptions
Weaker than expected U.S. economic data, and a renewed easy money push by the Global Central Bankers has elicited a negative Dollar reaction from the markets during the past few sessions. During the month of June, DXY has declined 2.6% after climbing 4.4% during the month of May. Which month's action represents the underlying trend of DXY? My work argues that the May rally was a pause, and rest- recovery period after the Dec. 2015 to May 2016 decline of 8.5% that established the dominant downtrend. If my work proves accurate, then DXY has entered a new down- leg within the dominant- and strengthening-- downtrend in the U.S. Dollar. Such a scenario appears to be gaining traction and confirmation by the action in the precious metals and mining sectors. MJP 6/08/16
Let's notice that during June so far, Spot Gold has turned up sharply off of a May correction from $1304.07 to $1199.84 on 5/30/16, which happened to coincide with a test of the rising 200 Day EMA. A climb above $1270 should trigger upside acceleration towards a test of the May high, in route to $1325-$1350 next.