Is the USD unstoppable?

The USD continues to make reach new highs as it broke a new resistance level today. The dollar has been winning against major currencies with big moves of strength observed against the Great British Pounds, Australian and New Zealand Dollars.

The US dollar has maintained a fairly consistent range since the EU referendum, which shows in the recent upward sloping of the US dollars chart.

The US dollars has most likely profited from the risk aversion stemming from the Brexit, and even as order is being restored with equities on the rise again, support continues to hold. Another probable reason for the USD's rise is the same reason for the soar in equities.

With the longing for a more dovish standpoint on the part of the UK, Australia and New Zealand, and the anticipation for "helicopter money" being handed out in Japan, only optimism trails the dollar.

With just a handful of places in the world for capital outflow having their Central Banks hint at future policy actions, these currencies will likely be perceived as weak sending the bulk of investors’ capital into the USD.

The result of this unanimous ideology is actively impacting equities all over the world in the weeks following the Brexit, fresh all-time peaks can be seen on the Dow Jones and S&P500, rallies can also be seen in the FTSE100, DAX and the CAC40. The major moves being made by Japanese stocks as seen lately in the Nikkei, which has risen by 12% since the Brexit, is of a huge significance. The victory of Shinzo Abe's coalition to gain a super-majority in the upper house of parliament will probably pave the way for more economic stimulus in the near future, which will lead investors to place more bullish bets on the Nikkei.

If currencies like the AUD, NZD and JPY are being pulled down by expectations of new economic policies and interventions, we will most likely see more capital flow into the USD therefore enhancing the strength of the currency.

Stocks hitting new highs might create room for Feds to start considering rate hikes for the rest of the year possibly happening in September or December.

A development of this nature should not be entirely shrugged off as highly unlikely in light of the April discussions held by the Feds to citing that they felt like the market was under-pricing the possibility for a rate hike in June, this remained the atmospheric mood during the month of May when stocks ended close to 2 and half month rallies, with one of the most extreme reversals seen in GOLD.

When Feds began considering the possibility of a rate hike in May, the USD was on the rise but Gold reversed more than $100 of the $350 gain pre-dating the loss, Gold eventually settled at the $1200 support level, Gold was soon after propelled into a bullish swing when the rates hike did not seem to be forthcoming and by the growing risk aversion caused by the Brexit-referendum.

The USD has proven major strength in recent times and is least likely to lose momentum anytime soon.