The rally in US stocks could be nearing an end given the dollar is showing signs of a recovery from its recent four-month slump, according to Jonathan Krinksky.
"You really need to see a weaker dollar to continue this equity rally," said Krinsky, managing director and chief market technician at stock brokerage BTIG, in a"We don't think there's a ton of downside for the dollar, and if there's not a lot of downside for the dollar, it's tough to see a lot of upside for equities," he added.
The dollar tends to have an inverse relationship with US stocks. So, when the US currency rises, equities usually fall. That's because a higher greenback squeezes companies' overseas income as they are forced to convert weaker foreign currencies into a stronger dollar. The US currency, which hit a nine-month low earlier in February, has since rebounded by more than 2% as the Federal Reserve stands ready to push for higher interest rates to combat inflation.
Rising interest rates tend to support a currency's value because they attract foreign investors seeking higher yields.Meanwhile, stocks have rallied this year so far as inflation showed signs of cooling. Year-to-date, mega-cap tech giants like
You don't need to retreat when you've lost the battle
Or, simply look at today's S&P chart.
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