The USD Index declined significantly yesterday, but did it change the outlook? Not at all.
The USDX moved to its 38.2% Fibonacci retracement based on the recent big rally, and that’s a normal thing for a market to do in order to cool down some of the more emotional investors.
The mid-2022 correction also ended when the USD Index moved close to its 38.2% Fibonacci retracement, so I’d say that this kind of decline is not bearish but rather in tune with the previous bullish pattern.
Also, while the USD Index moved to a new monthly low, gold and miners are far from their monthly highs. So, yes, the precious metals market is weak here, even though it might not be apparent based on the size of yesterday’s rally.
Remember when, on Nov. 6th, I told you that negative surprises in nonfarm payrolls are not necessarily a bullish thing despite the market’s initial reaction? The GDXJ plunged shortly thereafter. It seems that we are in a similar situation with regard to the CPI numbers.
You have been warned.