If you haven’t been paying attention to currencies lately, I would encourage you to take a closer look at the greenback (USD) chart below: a major trend shift appears to be developing. The USD is reversing its 2018-2019 uptrend over the past few weeks, which I view as another important tailwind developing for equities, notably cyclicals, in 2H19.

The USD rise in early 2018 coincided with a global shift in investors risk appetite, with assets like emerging markets and cyclicals generally peaking and heading lower through that year. My expectation at the beginning of 2019 was that that USD was likely peaking and would head lower, but the dollar managed to claw out marginal, albeit temporary, new highs in May.

However, an important technical event developed in June with the USD Dollar Index (DXY) moving lower to break its 2018-2019 uptrend. Then, in an almost textbook pattern, it rallied back to the underside of its 18-month uptrend and failed again, this time breaking the widely watched 200-day moving average. Currently, the DXY Index is challenging its next support band between 95.74 and 95.98.

While a short-term bounce could easily develop here, I’m looking for further weakness through 2H, another tailwind. I remain bullish on equities for H2 2019 well into 2020 giv...
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