Dollar Index Looks Unstoppable now
On Friday afternoon the new highs rose to 107.6, on the start of European trading session it went 107.45. Since Oct 2002 this was the highest rate and the index added around 20% to its 2021 low.
This is a positive secondary effect for the US(strengthening of dollar), reducing inflationary pressures through imports to ending the talk of dollar weakness that has been prevalent since late 2020.
Central bankers are not welcome too sharp fluctuations in any direction, however they are ignoring the exchange rate against any other currency.
Dollar got a little attention of appreciation by Fed, but it good to be prepared for the change in coming days and weeks to avoid the cause of any uncontrolled rise in dollar, which be devastating.
Fed has begun selling assets off its balance sheet, reducing it by $42.5B. The ECB stopped net buying in July, but active Fed like selling in the matter of uncertainty.
The strengthening of dollar looks controlled so far. But still, after the substantial rise to multi-year highs, markets could start a wave of movement from Europe and Asia, underpinned by the news and current exchange movements. The current market reached a point where it can move in one way. In such a case it is hard to talk about any levels could be the real turning point.