4 Reasons I'm Bullish the US Dollar (and What Would Flip Me)
4 Reasons I'm Bullish the US Dollar (and What Would Flip Me)
My Bias Is Dollar Bullish
I'm carrying a bullish bias on the dollar right now, and I can break the case into four reasons.
As a trader, you should pre-define not just why you believe something but what would change your mind. So at the end, I'll spell out exactly what would flip me to dollar-bearish.
1. Inflation Is Running Hotter Than Expected
The core of the bull case is hot inflation.
PPI printed 6% against 4.9% expected — a big upside surprise — and CPI came in at 3.8% versus 3.7%. The 2-year yield confirms inflation is getting embedded in the system. Most people already feel it through higher gas prices making travel more expensive. Sticky inflation keeps rates elevated, and that's supportive for the dollar.
2. The Jobs Data Isn't Bad
My second pillar is a decent labor market.
The last nonfarm payrolls came in much better than anticipated. I'm not saying jobs are in an excellent spot, but they're better than forecasts. Combine that with elevated inflation and you have a tailwind for dollar strength against other currencies for now.
3. May Seasonality
Third is seasonality.
May carries strong seasonal support for the dollar. Layer on an uptrend across both the 4-hour and daily charts, and the fundamental and technical pictures point the same way.
4. The Trend and the Chart
Fourth is simple but it matters — the trend.
I think the dollar index can break out of a brief consolidation and move back up toward 100.5. I could be wrong; this is a major resistance area, and if you believe the war is ending, the dollar could drop. That's why a stop loss matters. For context, I'm short GBP/USD off a 4-hour read, currently slightly underwater — if it keeps rising, I cut that trade too.
What Would Flip Me Bearish
If you pull up my channel in a week or two months and hear me talking very differently about the dollar, the trigger is clear.
It's a genuine end to the Middle East conflict. Until the White House announces "we've come to terms" and Iran fires back "yes, we accept," I think inflation remains a problem — because oil can only fall so far. Once that decisive scene shows up, I'll acknowledge it like most people and flip my bias.
The key is not chasing headlines in advance. Over the last few months, the better trade has been to fade headlines, not chase them.
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