The dollar is looking like a beast right now

Reuters/Todd Korol

The US dollar is looking like a beast right now.

It’s flying, surging higher against the euro and the yen as US bond yields continue to ratchet higher.

Even without specific details, traders are putting a lot of faith in that proposed pro-growth fiscal policies from US president-elect Donald Trump will lead to higher growth, higher inflation, higher yields and a stronger US dollar in the period ahead.

As a result of the enormous gains against the euro and yen, the broader US dollar index, or DXY, is also charging higher, rising back above the 100 level for the first time since early December last year on Monday.

It’s now gained 4.3% from the lows struck on November 9, extending the move from early May this year to 8.8%.

The euro and yen account for over 70% of the weighting in the index.

As this chart shows, the only question now is whether the DXY will push above 100.51, the high struck nearly one year ago. It’s had a lot of trouble doing so in the past, so technical traders will be paying close attention.

Reuters/Todd Korol

In recent days analysts from Goldman Sachs and Deutsche Bank have released bullish calls on the outlook for the US dollar, suggesting that its recent strength will likely continue in the period ahead should the US Federal Reserve lift interest rates in mid-December.

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