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BUZZ-COMMENT-Dollar downtrend, stocks uptrend not far from key obstacles

Credit: REUTERS/DADO RUVIC

The dollar's fall may be nearing a final phase, if the negatively correlated S&P 500’s recovery in the wake of its pandemic pounding, loses momentum. Indeed, the broad stock market average finds itself only about 5% shy of its pre-pandemic record high.

July 17 (Reuters) - The dollar's fall may be nearing a final phase, if the negatively correlated S&P 500’s recovery in the wake of its pandemic pounding, loses momentum. Indeed, the broad stock market average finds itself only about 5% shy of its pre-pandemic record high.

Meanwhile, the dollar index is hovering just above June's 95.71 low and that's not far from its early March trough at 94.63. But to test that trough, the S&P index would likely have to break clear of its June-July highs in the 3,230s, allowing it to challenge its February 3,393.52 peak.

In any event, it would seem the inclination near the record high, amid the ongoing fallout from the pandemic, would be to take some profits on the massive rise in stocks and dive in the dollar.

Both of those trends have been fed by the notion that there is no alternative -- TINA -- , due to global reserve currency interest rates all falling toward, or below, zero. Additionally, pandemic fiscal and monetary backstopping has underpinned asset inflation.

If the urge for equity-market bulls to pocket some profits, or for bears to take a second shot at selling the top, pans out, the dollar will likely find support near its 94.63 March nadir.

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Charthttps://tmsnrt.rs/394DjE9

Charthttps://tmsnrt.rs/394UrcR

(Randolph Donney is a Reuters market analyst. The views expressed are his own.)

((randolph.donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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