Gareth Soloway argues the U.S. dollar is in a bearish technical setup, with de-dollarization already underway and likely to continue lower. He says the DXY has formed a bear flag, failed to rally meaningfully during war risk, and that a weaker dollar should support euro, pound, Canadian dollar, Australian dollar, gold, and silver.
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Gareth Soloway opens by saying the U.S. dollar and interest rates are key to watch while stocks are at all-time highs and rates remain stubbornly elevated. He focuses on the DXY and argues that the dollar’s sharp decline after Trump took office in early 2025, combined with tariff shocks to other nations, pushed foreign countries to reconsider holding the dollar as the dominant reserve currency. In his view, this is evidence of gradual de-dollarization. He emphasizes that the dollar’s reaction to the U.S.-Iran war was weak relative to what past safe-haven behavior would have suggested. He says the rally in the dollar was limited and that this failure to surge is a major signal that the dollar is headed lower. …
Near term, the trade is to watch for a downside break in DXY and continuation strength in major non-dollar FX pairs; any abrupt dollar bounce would be the main tactical risk. The current setup looks fragile for dollar bulls because the war-related safe-haven bid did not materialize strongly.
Over the next few weeks to months, the base case is a grind lower in the dollar toward the low-90s, with confirmation coming from sustained breakout behavior in EUR/USD, GBP/USD, AUD/USD, and CAD. The thesis weakens if policy shifts or a broader risk-off event restores classic safe-haven demand for the dollar.
The long-run view is a gradual erosion of dollar reserve dominance, not an overnight collapse. If that regime change continues, it should favor hard assets and non-dollar currencies while making U.S. imports structurally more inflationary.
The U.S. dollar’s decline after Trump took office in early 2025 was intensified by tariffs and made other countries question the dollar’s role as reserve currency.
He ties the early-2025 dollar drop to tariff shocks and says foreign nations began reassessing dollar dependence.
The dollar’s limited rally during the U.S.-Iran war is a bearish signal because a stronger safe-haven bid would have been expected historically.
He says the dollar rallied only modestly and underperformed past war-period safe-haven behavior.
The DXY is forming a bearish flag pattern and is likely to break lower.
He explicitly calls the consolidation after the decline a bear flag.
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