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Summary: The U.S. dollar is on an impressive winning streak, marking its 10th consecutive weekly gain, the longest since 2014. A significant technical indicator, known as a “golden cross,” where the 50-day moving average surpasses the 200-day moving average, has just occurred, hinting at further potential strength for the greenback. This resurgence in the dollar could pose challenges for the stock market.

The ICE U.S. Dollar Index, a measure of the dollar against major currencies, recently closed at 105.56, its highest level since March 10, 2023. This sustained rise in the dollar began after a “death cross” occurred on January 10, leading to a six-month downtrend. However, the Federal Reserve’s decision to maintain interest rates above 5% through 2024 has reversed this trend.

Historical data suggests that following a “golden cross,” the dollar tends to gain an average of 1.9% over the next three months, with a 79.2% success rate. The one-year outlook is more mixed, with a 58.3% success rate and an average gain of 1.5%.

Past instances of a “golden cross” have resulted in substantial dollar advances, raising concerns among analysts that the dollar’s ascent, combined with rising Treasury yields, may create challenges for the stock market. The S&P 500 recently experienced its largest single-day drop since March 22, emphasizing the potential headwinds.

In conclusion, the U.S. dollar’s resurgence and the technical “golden cross” signal suggest that it may continue to strengthen, potentially impacting stocks and financial markets.