One week ago we highlighted the repeated testing and failure of the 95 level in DX futures - While the dollar roared higher over the past 3 months, it actually spent most of the last 5 weeks consolidating the gains of 6 weeks prior.
Even though we made new intermediate trend highs last week, we see the 23day channel flattening out, and oscillators were diverging, making lower highs - this was signaling that this move had become exhausted. Now with Trump making a deal with the EU to hold off on auto tariffs, this was the push needed to get the dollar below the key reversal pivot zone of 94.05 - 94.15.
This areas not only marks the key monthly pivot, but it also represents the lower 23 day adaptive channel line support. So while we are trading below this level right now in the overnight session, it is important to print a daily close for confirmation - So lets see if this reversal can be confirmed tomorrow, or if there will be a few more headfakes before rolling over.
This would give commodity bulls a tail wind to recapture some of the ground lost over the past 3 months. We already see Wheat and Beans rallying smartly, and believe Copper and Softs will follow. Disappointingly precious metals continue to lag, apparently boxed in by the ever weakening Yuan, so you will want to be careful if bottom fishing in that space.
We especially like the setup in Oct Hogs, and will present our bull case tomorrow.