Dollar Dominance Shift Sparks Trend Break

The US Dollar Index (DXY) has broken its long-term trend due to fiscal dominance and Federal Reserve-assisted yield curve control, according to a recent analysis. The author of the piece, who is a dollar bear for the first time since Liberation Day, notes that this phenomenon breaks the DXY's post-Global Financial Crisis channel near 90 and grinds toward the 80s.

The reason behind this trend break is yield curve control, which means the Federal Reserve is printing money to pin yields where Treasury needs them. This process absorbs Treasuries and supplies new dollars, making the dollar over-issued and under-remunerated, leading to it being sold.

The author expresses concerns about the dollar's vulnerability due to fiscal dominance and global de-dollarization trends persisting. As a result, they are avoiding duration and adding none on the long end of their portfolio, opting instead for alternative investments, including dollar-neutral strategies like Simplify's FOXY.