$USD Update

This post really belongs in a larger, broader, Market update. However with the F_E_D so concerned about a strong $USD and hiking rates, I think it is probably a useful post to have before the F_O_M_C.

On April 2 we had a second forecast which was for the $USD, it's from the post Market Update and the chart and forecast are directly below. There have been additional updates to it since then, but no changes.

"The $USD is seeing some weakness which is something I expected near term before a larger bounce and then an even larger decline"

Since then this is what has happened...

 This shows April 2 at the bottom at #1 and a base forming just a day or so later which led to the forecasted, "before a larger bounce" which is at #3, followed by in negative divergence and downside reversal at #4. has been in line with the rest of the forecast "and then an even larger decline" at #5 which is the larger decline. At #6 we have a small, but normal, countertrend bounce leading to a lower low at #7.

This is exactly the forecast from April 2 for the $USD.

I do believe we may see another countertrend bounce as we near some support on the primary trend chart.

 This is the daily chart of the $USD, note the 3C positive divergence on the uptrend and a strong negative divergence since. The forecasted bounce failed to make a higher high and the primary trend which is a significant event. The forecasted larger decline to follow that bounce has made a lower low so far Anna closing basis and is near making a lower low on an intraday basis. This is a trend changer and may have strong implications for an earlier F_E_D rate hike not to mention the implications of a $9 trillion $USD Carry trade unwind in which a lot of that Carry went in to equities.

It is this short-term countertrend bounce forming that has me a little puzzled, although it would be very normal coming up on the last vestige of support before making a  lower low in the primary trend.

However, This may indicate some short-term Fed dovishness I expected today as the USD would be expected to gain on any dovish tone.

However like the market, as you can see on the daily chart, The damage is done and there is a trend change coming. I didn't have time to confirm or at least post the confirmation charts of Japanese yen, but they do confirm as I wrote in an article about two years ago expecting the end to rise as the market enters a primary downtrend. This is the carry trade unwind.

The bulls' mantra has been, "This Time it's different", the charts above beg to differ.