The dollar - the "more monetary stimulus" hysteria

I previously commented on the dollar here. I was expecting a drop to the first important support level (lower blue line in the chart below). This expectation was formulated in the context of an extension of the market rally to 1450 SPX.

Weekly chart of the June contract for the US Dollar index. 

Since then, however, the SPX seems to have put in an intermediate term top and the dollar is forming a diamond chart pattern.

A diamond is a reversal pattern but I do not rely too much on the predictive value of chart patterns. I only take them seriously when the market is breaking out.


A break out may happen when the market realizes how foolish it is to already expect more monetary stimulus from the Fed. The deceiving employment report  has inflamed some impatient spirits.

The Fed does not change course from day to day. It can break the dollar rally but it would have to hint at it first. For now, all the hints where in the direction of no more stimulus.