{"id":58099,"date":"2023-01-10T09:00:20","date_gmt":"2023-01-10T14:00:20","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58099"},"modified":"2023-01-12T08:55:50","modified_gmt":"2023-01-12T13:55:50","slug":"is-dollars-dominance-over","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/01\/is-dollars-dominance-over\/","title":{"rendered":"Is Dollar's Dominance Over?"},"content":{"rendered":"

Last September, the Congressional Research Service published an \"In Focus\" report. They had already attempted to address speculation about the dollar's dominance in the face of global economic and geopolitical changes at the time.<\/p>\n

Three major threats were addressed in that document. <\/p>\n

China and its currency have risen to sixth place, accounting for 1.66% of global payments. <\/p>\n

The next source of concern was US financial sanctions, as the share of Russian exports to Brazil, China, India, and South Africa in US dollars fell from 85% in Q2 2018 to 36% in Q4 2021.<\/p>\n

Digital currencies, which include cryptocurrencies and digital currencies issued by central banks, have completed the list. <\/p>\n

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\u201cSome policymakers have expressed concerns about an international race to create a digital currency with widespread adoption, arguing that the United States should create a U.S. digital currency to maintain the dollar\u2019s prominence in international payments.\u201d<\/em><\/p>\n

\"To date, there is no evidence of a shift away from the US dollar as the dominant reserve currency,\"<\/em> the study concluded.<\/p>\n

Back in October, I shared my most recent update for the dollar index<\/a>, as it hit the first target<\/a> with a fresh outlook. <\/p>\n

At the time, I proposed two paths for the dollar: a continuation to the next target of $121 on an aggressively hawkish Fed, or a consolidation before resuming to the upside. The majority of readers supported both paths, with the consolidation option coming out on top.<\/p>\n

The question of the dollar's dominance is resurfacing these days, as its value has plummeted dramatically. It is too early to tell whether this is a consolidation or a global reversal. <\/p>\n

One thing is certain: the path of unending growth has been abandoned.<\/p>\n

In my charts, I see a clash of perspectives. The technical chart is about to give a strong bearish signal. The chart comparing fundamental factors, on the other hand, supports the king currency's continued strength.<\/p>\n

Let me show you each of them one by one, beginning with the emerging bearish alert. <\/p>\n

\"Dollar<\/a>
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Source: TradingView<\/a><\/em><\/center><\/small><\/p>\n

In the dollar index daily chart above, there are two simple moving averages. The blue line represents the 50-day moving average, while the red line represents the 200-day moving average. <\/p>\n

We can see that the short-term blue line very closely approached the long-term red line from above last week. When it falls below the latter, a bearish pattern known as a \"Death Cross\" will form. It will indicate a downward shift in the trend.<\/p>\n

Furthermore, the RSI indicator failed to cross above the critical 50 level when the December Bullish Divergence played out.<\/p>\n

The first support could be near the $100 round number. The previous high of $97.4 established in January of last year is the next support.<\/p>\n

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Will the dollar index chart show the bearish \"Death Cross\"?<\/strong><\/p>