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The DXY chart on a weekly time scale, highlights an Overbought DXY trend, where the RSI oscillator also signals OVERBOUGHT conditions. In the Chart with the RSI , similar Overbought patterns have been highlighted,
with approaching a Sell Signal and a trend reversal.
Some macroeconomic elements and financial can force a softening of the USDollar . The American economy carries forward a double deficit, Fiscal Deficit and Trade Deficit. While U.S. Treasuries continue their sell-off, The Softening USDollar could become a proactive incentive for investors in buying up some U.S. Treasuries, considering that at this time, Non-Dollar Investors are going to be hit by Exchange Rate risk and rising Yield risk, thereby buying U.S. Debt, becomes a losing money proposition. That in turn makes it difficult for the Fiscal Deficit to be financed with potentially even higher Yields being required.
The other side of the Deficit, it’s obviously the Trade Balance Deficit of the U.S. economy which keeps growing to the tune of $-80.0 Billion dollars every month. Being mainly an importing economy the American economy could prefer a slightly overpriced USDollar , however, too strong a Dollar would continue to make unaffordable American products exports, thereby at a time when global economy supply chains have to be changed, with European economies in need of importing more products from the United States, a softening of the USDollar also would be required to spur the import/export activities between the United States and Europe.
Thereby, on a macroeconomic standpoint, the USDollar could be required to reprice lower, in order to mitigate exchange rate risk for NoN-USDOLLAR, U.S. Treasuries and TBill buyers, while also allowing more imports of American products from Europe.