US Dollar Gains Ahead as Risky Assets Approach Resistance

Recent weeks have seen an impressive rebound in risky assets, sending stock markets higher and weighing on the US Dollar (the safe haven asset du jour). However, technical positioning hints that the upswing is corrective in the context of a larger downtrend. Looking at the MSCI World Stock Index, we see prices remain trapped in a falling channel and now stand within a hair of resistance at the upper boundary:

[B]MSCI World Stock Index (daily)[/B]

The implications of a reversal lower in global stock prices suggest a simultaneous rebound in the US Dollar. Indeed, the greenback is now over 92% inversely correlated with the MSCI World Stock Index:

[B]MSCI World Stock Index vs. USD Index (180-day rolling correlation)[/B]