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Forex: Will the US Dollar Rally as the Dow Tumbles?

Forex: Will the US Dollar Rally as the Dow Tumbles?

John Kicklighter, Chief Strategist

The broken neckline of a prominent S&P 500 head-and-shoulders pattern is a dramatic move to suggest a wave of risk is washing over the market. Yet, if that is the case, why did the safe haven dollar not surge in response? There is no doubt the technical move by the US equity market can trigger a market-wide deleveraging effort as investors pull back exposure that was placed on the assumption of limitless central bank support. However, such a scenario requires a systemic shift and is therefore not lightly engaged. In today's video, we discuss why the connection between the Taper and underlying risk is so important along with the best trade setups for the different bearings the market can take.

Find out what event risk can threaten the trade setups discussed in today's video with the DailyFX Economic Calendar.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.