Forex and Stock Markets
The trend of the US dollar often shows a significant correlation with the Dow Jones Industrial Average in the US stock market. Their relationship can be described as mutually reinforcing, generally moving in the same direction. You could interpret it as the rise of the Dow Jones Index driving the strength of the US dollar, or conversely, the strength of the dollar further stimulating the surge of the Dow Jones Index.

For investors, the correlation between the US Dollar Index and the Dow Jones Index is easy to understand: in today’s increasingly frequent international capital flows, the profit opportunities created by a rising US stock market will inevitably attract foreign capital to flow into US stocks, driven by the profit-seeking nature of capital. Since investing in US stocks requires US dollars, the demand for the dollar will inevitably increase, making the rise of the Dollar Index easy to comprehend.

A stronger dollar is a sign of a thriving US economy, and its strength further boosts investors’ confidence in the rise of US stocks, thereby driving the continuous upward trend of the US stock market. This mutually reinforcing and closely linked phenomenon provides investors with a solid basis for judging the trend of the US dollar in the forex market based on the performance of the stock market. In reality, the trends of the Dollar Index and the Dow Jones Index are highly synchronized—it can be said that they move in sync nine out of ten days.
Similarly, a rise in the Nikkei Index will stimulate the yen to strengthen, while a decline in the Nikkei Index will weaken the yen.

Forex and Gold
The trend of the US dollar often moves inversely to that of gold—when the dollar rises, gold falls, and when the dollar falls, gold rises. This pattern was broken in 2005 when a unique situation emerged where both the dollar and gold rose, or the dollar fell while gold continued to rise. After 2010, such occurrences became more frequent. However, as long as the US economy develops new growth drivers that can provide internationally competitive returns, the relationship will eventually return to normal.

Forex and Oil Prices
The trend of oil prices is also inversely related to that of the US dollar. The connection between fluctuations in international oil prices and the forex market has become increasingly evident, as we have deeply observed. Rising oil prices affect everyone and have undeniable economic consequences. As the world’s largest crude oil importer, the US economy relies on stable oil prices, and continuously rising oil prices clearly harm its economy. Higher oil prices dampen investor enthusiasm for US securities, gradually reducing demand for the US dollar and creating an inherent pressure for the dollar to depreciate.
Additionally, the interconnectedness between stock markets, as well as political, economic, and military factors, must be considered, as these can all influence forex market trends.