2022 had been a good year for the US dollar. There are a few factors that have contributed to the dollar's recent surge. One key factor to consider is the role of the dollar as a safe haven asset, particularly as a hedge against inflation. Previously, investors had been using the dollar to protect their wealth against rising prices, as inflationary pressures continued to build in many countries around the world. However, as the rate of consumer price index (CPI) growth slowed down, the dollar's performance also slowed.
Now, with the energy market showing no signs of slowing down and the oil rate of change 14 period showing upward momentum, the dollar's role as a safe haven asset may be back in focus. The chart pattern also has a leading diagonal, which could indicate a potential trend reversal. These factors could be driving demand for the dollar and contributing to its recent upward trend.
However, it's worth noting that an oil spike could fuel an inflationary environment, which could lead to fears of rising prices and potentially harm the stock market. This is something to keep an eye on as the dollar's uptrend continues.
Another key context to consider is the VIX 14-day rate of change, which is currently showing an upward momentum. This suggests that market volatility is on the rise, which could also be a factor in the dollar's uptrend.
It's worth noting that the weekly 0.382 Fibonacci retracement zone is also an important level to watch. This level acts as a support level for the USD and if it holds, it could indicate that the dollar's uptrend is likely to continue.
Overall, while there are risks to consider, it looks like the dollar's final move up may be just getting started. As always, it's essential to keep an eye on key economic indicators and market trends to get a better understanding of where the dollar is headed next.
