Today’s Chart of the Day was shared on Twitter by Alex Barrow (@MacroOps). It's a chart of the US Dollar Index ($DXY) over the past 9 years along with the Citi Pain Index. This short-term indicator measures crowded market conditions in the US Dollar Index. Alex points out that the current reading of -40 suggests that the US Dollar short has become a crowded trade. An unwind of this large short positioning could fuel a sharp mean-reversion rally in the near-term, which would likely provide a headwind for a number of asset classes including, Stocks, Precious Metals, and Emerging Markets. For more on how extreme US Dollar sentiment and positioning have become, check out Alex's full blog post - iS tHE dOLlaR abOUt to cRaSH?
Chart of the Day - Tuesday, August 25th, 2020
August 25, 2020
