“Knowledge is an unending adventure at the edge of uncertainty.” – Jacob Bronowski

As we navigate headline risk and get ready for the BOE and ECB decisions, there is no change to what we discussed in our latest Weekly Outlook Video.

Equities continue to chop around at highs as we wait for the next catalyst for a proper move and once again, we reiterate, something has to give as this divergence between the US and the rest of the world will not continue ad infinitum.

The most interesting recent development is the DXY trying to get some downside traction as we continue to focus on the failure in the 96s and expect a retest of the 50WMA before we get more clarity on the bigger cyclical direction. We remain open to what price will tell us but as for now, we are still leaning to the downside.

Remember that there are a lot of stretched positions that still need to unwind if this DXY downside gets traction. Apart from the commodity complex, notably we had highlighted CHF and NZD with the former having played out and the latter still very much in play.