Weakness in the US Dollar was a huge story in 2017, providing a huge and under-appreciated tailwind for asset prices.
The Dollar is starting the year off hot and heavy, or just heavy, already testing the 2017 low. Clearly, a further breakdown would just be further tailwind for stock prices.
The Long Term Dollar chart shows just how important the fake breakout of 2017 was. Price action is suggesting that lower is still the dominant trend. That said, there is a well defined uptrend off of the 2011 lows. The reasonable trend support area also happens to be an old resistance level around 88.
The 88 area is one in which we’d have to be concerned about the dollar becoming a headwind for stocks. We might just get there in short order. If the dollar holds that trend, we can throw out any crashing dollar thesis that will inevitably hit the wires.
It’s possible the 2017 low holds, but based on the tectonics of the dollar chart it’s much less likely.