By Tim Seymour
The dollar index (DXY) is printing higher lows, and given what we see in the technical set-up, there are still plenty of twists and turns here for global traders to negotiate.
Even though the dollar index — which tracks the greenback’s performance against a basket of other global currencies — broke through its 50-day support last week, it still held the key 74.30 level that has been our trough throughout June.
That is good news for DXY bulls since it indicates that, at least over the short term, the bottoming pattern we have seen come into play is still alive.
Good news for dollar-long vehicles like (UUP)? Maybe, although the leverage that these funds represent can make them a bumpy ride for retail traders:
Bad news for dollar shorts like (UDN)? Again, it is quite possible.
And in the meantime, another bull run for the dollar could wreak havoc in the commodity markets and across the emerging world, where a stronger greenback can make localized food and fuel inflation worse.