I know I’m probably still in the minority thinking the Dollar is toast. I’ve been saying it for a long time, with charts going back years. I’ve never known why it would happen, just that my charts suggested it’s much more likely than DXY 120 or more. In this context, the following is interesting…

The dollar nursed savage losses against the yen and euro on Friday as a plunge in U.S. yields to record lows wiped out the currency’s single greatest attraction for investors — higher interest rates.

Mounting fears over the fallout from the coronavirus has driven a truly tectonic shift in expectations for U.S. rates as markets wager the Federal Reserve will have to cut rates by 50 basis points for a second time this month.

The resulting collapse in Treasury yields — which fell another 10 basis points in Asia — has been the death of one of the most popular carry trades globally — borrowing at negative rates in the euro and yen to buy U.S. assets.

“Select USD pairs like EUR/USD are turning because of a dramatic and decisive shift in U.S. rate expectations and related spreads,” said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank.

“The USD has lost the single most important source of its over-valuation, a strong carry advantage,” he added, warning this could end a dollar uptrend that has lasted since mid-2018.

Edit: Chart added