US Dollar Index consolidates gains near its 200-DMA [Video]

Forget about the Federal Reserve (Fed) dovish expectations that should be dialed back because the American economy is too strong to require a rate cut as early as March from the Fed. Forget that strong US economic data is not good news for the market. And forget about the fact that the rally in tech stocks should temper, to let the rest of the market catch up with the Magnificent 7. Because it isn’t happening. Nasdaq 100 hit a fresh ATH yesterday, even though the latest US data showed that the initial jobless claims fell more than expected to the lowest level in more than a year, the mortgage rates slipped after a two-week rise, and home data was better than expected, as well.

TSM, the main chipmaker of Apple and Nvidia, jumped nearly 10% yesterday, after the company said that it expects a return to solid growth this quarter. Nvidia hit a fresh record.

The US dollar index consolidates gains near its 200-DMA. The EURUSD is rangebound between its 50 and 200-DMAs, near the limit of the major 38.2% retracement on October to January rally, which should distinguish between the continuation of the positive trend or a medium term bearish reversal. I think that the latter is more likely and the USDJPY continues to extend gains above the 148 level, boosted by weak inflation data. The BoJ meets next week and will certainly push back on the normalization bets. Yet at the current levels, the USDJPY is subject to verbal intervention from the BoJ to cool down the selling pressure. Therefore, buying the USDJPY at the current levels is risky.