CLICK ON CHART TO ENLARGE
The rally in the U.S. Dollar over the past few months has increased the number of Dollar bulls to a pretty lofty levels, as well as other Dollar indicators are reaching overbought levels too.
Over the past few years when sentiment reached these levels the Dollar needed to decline for a while, to work off the excess bullishness. The Dollar may have created a short-term Head & Shoulders topping pattern that needs to be worked off at the same time!
Over the past few months the Dollar and S&P 500 have trended together/high correlation. If the U.S. Dollar would declines, will the high correlation between the Dollar and stocks continue?