DXY Rally: Is the Dollar About to WRECK Global Markets?
Published: 2025-10-15
Status:
Available
|
Analyzed
Published: 2025-10-15
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 6
Prediction
Topic
Status
A rising DXY (US Dollar Index) will drain liquidity from other assets and pull it into the dollar.
"And that's why every time the DXY climbs, the pressure ratches up, draining liquidity out of other assets and pulling it back into the dollar."
Correct
A dollar short squeeze could lead to a global market crash.
"And when that happens, squeeze will become too much to bear and global markets could crash."
Incorrect
A forced revaluation, akin to a Plaza Accord, will eventually occur to devalue the US dollar.
"At some point, a forced revaluation, something like a modern-day Plaza Accord, will have to happen to push the dollar down."
Incorrect
Gold and Bitcoin are predicted to perform well as debasement-resistant forms of money when the dollar is devalued.
"That's when gold and possibly Bitcoin will shine brightest as forms of money that can't be debased."
Pending
The US dollar is predicted to remain dominant in global trade for decades.
"The US dollar... is likely to remain dominant for decades to come."
Pending
The yen carry trade is described as a trillion-dollar liquidity machine that depresses the value of the yen.
"It's essentially a trillion dollar liquidity machine that constantly pushes the yen lower."
Correct
Despite its own fiscal issues, the US dollar is predicted to remain the strongest currency among a group of weakening alternatives.
"The difference is that compared to every other currency, the dollar is still likely to be the last one standing."
Correct
A shortage of US dollars will trigger a short squeeze.
"If there's a shortage of dollars, that's when the short squeeze begins."
Pending
Historically, the Federal Reserve's policies have aimed for a gradually weakening dollar, which fosters global growth and US dominance.
"The default [policy for the Fed for the last 50 years] was that the dollar should gradually weaken. A weaker dollar is the default because it makes global growth possible and ultimately increases US dominance."
Correct
A strengthening US dollar will have the opposite effect of a weakening dollar, likely hindering global growth and US dominance.
"But if the dollar starts getting stronger, the opposite will occur."
Pending
The loss of the US dollar's reserve status is viewed by Donald Trump as a significant geopolitical defeat, comparable to losing a war.
"Trump has even said that losing the dollar's reserve status would be quote like losing a war."
Pending
The 'Genius Act' is expected to solidify US dollar dominance in the digital economy and increase demand for US debt.
"And with the Genius Act now passed, the US has laid the legal groundwork to lock in that advantage, reinforcing dollar dominance across the digital economy while creating even more demand for its debt."
Pending
The DXY is poised for a significant move and is expected to decline due to the recent US government shutdown.
"At the time of recording, the DXY looks primed for a breakout in either direction, and it's likely to break down as a result of the recent US government shutdown."
Pending
The current positioning against the DXY suggests it is the second shortest in twenty years, indicating a potential short squeeze.
"positioning is the second shortest it's been in two decades, which could result in a short squeeze."
Pending
The current downward pressure on the DXY due to the government shutdown may be temporary, with a potential rally to occur sooner than anticipated.
"It suggests that this squeeze lower could be temporary and that the DXY could start rallying again sooner than people think."
Correct
As the DXY rises, borrowed dollars will become more expensive, leading to capital flowing back into the dollar and further increasing its value.
"And when the DXY starts pushing higher, all those borrowed dollars will become more expensive and capital will rush back into the dollar, driving it higher."
Correct
The DXY is expected to break down, potentially due to the US government shutdown.
"the DXY looks primed for a breakout in either direction, and it's likely to break down as a result of the recent US government shutdown."
Pending
The current downward pressure on the DXY due to the government shutdown might be temporary, with a potential rally expected sooner than anticipated.
"This is sobering considering the squeeze lower caused by the recent US government's shutdown. It suggests that this squeeze lower could be temporary and that the DXY could start rallying again sooner than people think."
Pending
Gold and Bitcoin are predicted to perform exceptionally well during a forced revaluation scenario, like a modern-day Plaza Accord, as they are seen as non-debasable forms of money.
"That's when gold and possibly Bitcoin will shine brightest as forms of money that can't be debased."
Incorrect
The current market expectation is for the DXY to fall in the short term, but a reversal of this consensus could lead to a significant negative surprise.
"Yet, for now, the world seems to be positioned for the dollar to keep falling in the short term. But if that consensus is wrong, we could be in for a very nasty surprise."
Pending
The yen carry trade, fueled by ultra-low interest rates in Japan, is a significant driver of yen depreciation and remains active despite market volatility in the summer of 2024.
"It's essentially a trillion dollar liquidity machine that constantly pushes the yen lower. And we saw just how dangerous this was. In the summer of 2024, the BOJ made a small rate hike. And on August 5th, markets went into meltdown. Yet, even after that shock, rates are still pinned near the floor, which means the yen carry trade is very much still alive."
Correct
A rise in the DXY will increase the cost of borrowed dollars and prompt a surge of capital into the dollar, further inflating its value.
"And when the DXY starts pushing higher, all those borrowed dollars will become more expensive and capital will rush back into the dollar, driving it higher."
Incorrect
Current positioning data for the DXY indicates that hedge funds and asset managers are heavily shorting it, reaching a 20-year low, which could lead to a short squeeze.
"Hedge funds and asset managers are betting heavily against it. In fact, positioning is the second shortest it's been in two decades, which could result in a short squeeze."
Incorrect
A potential rapid rise in the DXY could lead to a global market crash.
"And when that happens, squeeze will become too much to bear and global markets could crash."
Pending
Historically, the Federal Reserve's policies have aimed for a gradually weakening dollar, which is seen as beneficial for global growth and ultimately increasing US dominance.
"for the last 50 years, its policies have assured one thing. The dollar should gradually weaken. A weaker dollar is the default because it makes global growth possible and ultimately increases US dominance."
Incorrect
An increase in the DXY will make borrowed dollars more expensive and trigger a capital flight back into the dollar, further strengthening it.
"And when the DXY starts pushing higher, all those borrowed dollars will become more expensive and capital will rush back into the dollar, driving it higher."
Pending
As of August 2025, Japan's inflation is at 2.7%, above the 2% target for three consecutive years. Despite this, the Bank of Japan is unable to raise rates due to the country's high debt levels, which would trigger a fiscal crisis.
"the Bank of Japan is stuck. Inflation has been above its 2% target for 3 years straight, sitting at 2.7% as of August of 2025. Under normal circumstances, they'd raise rates to cool things down. But with such a mountain of debt, higher rates would trigger a fiscal crisis."
Correct
Pessimistic forecasts suggest the UK's national debt could reach nearly 274% of GDP by the 2070s.
"Under pessimistic forecasts, the UK's national debt could balloon to nearly 274% of GDP by the 2070s."
Pending
European leaders' commitment to spending 5% of GDP on defense will likely necessitate large-scale bond purchases by the ECB, leading to quantitative easing which is expected to put downward pressure on the Euro.
"European leaders have recently committed to spending 5% of GDP on defense. That's a massive bill. And to cover it, the ECB will likely have to step in with largecale bond purchases. In other words, quantitative easing. And we know QE puts downward pressure on a currency."
Pending
The US dollar is predicted to remain dominant in the global economy and trade for decades due to the demand for US debt and the Federal Reserve's role.
"The US can issue mountains of debt knowing that foreign governments and investors will buy its treasuries or that the Federal Reserve itself will step in. The result is that the dollar has become the financial bloodstream of the global economy and despite all the talk about its decline, it still underpins most of global trade and is likely to remain dominant for decades to come."
Pending
Analyst Brent Johnson predicts that dollar strength, not weakness, will ultimately lead to the collapse of the financial system, citing over $50 trillion in global dollar-denominated debt requiring over $1 trillion annually in servicing costs.
"Brent Johnson believes that it's dollar strength that will eventually break the system, not dollar weakness. To put things into perspective, estimates put global dollarated debt at over $50 trillion. Just servicing that mountain of debt likely costs more than a trillion every single year."
Pending
A dollar shortage could trigger a short squeeze, forcing foreign entities to sell assets and currencies to acquire dollars for debt repayment, making refinancing prohibitively expensive as the 'dollar maturity wall' approaches.
"If there's a shortage of dollars, that's when the short squeeze begins. Foreign entities are forced to sell assets, sometimes even their own currencies, just to acquire the US dollars that they need to pay down the debts. And as the dollar maturity wall hits more and more economies, refinancing that debt becomes brutally expensive."
Correct
Former President Trump views the loss of the US dollar's reserve status as a catastrophic event, comparable to losing a war.
"Trump has even said that losing the dollar's reserve status would be quote like losing a war."
Pending
A strengthening dollar is identified as a potential risk that the global financial system may be facing.
"But if the dollar starts getting stronger, the opposite will occur. And that's the risk that we could now be facing."
Correct
A forced global revaluation, akin to a modern Plaza Accord, is predicted to be necessary to devalue the US dollar at some future point.
"At some point, a forced revaluation, something like a modern-day Plaza Accord, will have to happen to push the dollar down."
Pending