Strykr Analysis
BearishStrykr Pulse 43/100. Dollar support is weakening as tariffs and inflation bite. Threat Level 4/5.
If you thought tariffs were a relic of 2018, think again. The ghosts of trade wars past are back, and this time, the stakes are higher. As the US presidential election cycle heats up, the Trump administration’s tariffs are once again making headlines, and Americans are starting to feel the squeeze. The Wall Street Journal’s latest opinion piece (2026-02-16) reads like déjà vu: readers vent about higher prices, supply chain bottlenecks, and the not-so-invisible hand of government intervention. But beneath the surface, something more consequential is brewing. The dollar, long the world’s safe haven, is starting to look a little less invincible.
The facts are hard to ignore. Since the announcement of renewed tariffs on Chinese imports, consumer prices in the US have ticked higher. The latest CPI print surprised to the upside, and anecdotal evidence from retailers suggests that the pain is just beginning. Supply chains, already battered by years of pandemic disruptions, are once again under strain. The result? A classic cost-push inflation scenario, with the dollar caught in the crossfire.
Historically, the greenback has thrived on chaos. When the world goes risk-off, dollars flow home. But this time, the calculus is different. The euro and yen are no longer the punchlines they once were, and even the renminbi is showing signs of life. As tariffs bite and inflation expectations rise, the dollar’s safe haven status is being tested. The DXY index has been rangebound, but the underlying flows tell a different story. Central banks are quietly diversifying reserves, and foreign investors are starting to hedge their dollar exposure. The last time we saw a similar setup was in 2019, when the dollar peaked and then drifted lower as trade tensions escalated.
The macro backdrop is a minefield. The Fed is stuck between a rock and a hard place. Cut rates, and risk stoking inflation. Hike, and risk a recession. The bond market is pricing in a higher-for-longer scenario, but the curve remains inverted. Meanwhile, the US consumer is showing signs of fatigue. Retail sales have stalled, and consumer confidence is wobbling. The next leg of the trade war could be the straw that breaks the camel’s back.
The real story here is not just about tariffs or inflation. It’s about the credibility of the dollar as the world’s reserve currency. If the US continues down the path of protectionism, foreign investors may start to look elsewhere. The eurozone, for all its flaws, is running a current account surplus. Japan is still the world’s largest creditor nation. Even emerging markets are getting in on the act, with central banks from Brazil to India adding gold and diversifying reserves. The dollar is still king, but the challengers are getting bolder.
The technicals are starting to reflect this shift. The DXY index is stuck in a tight range, but momentum is fading. Support sits at 103, with resistance at 105. If the index breaks below 103, expect a rush to the exits. The options market is starting to price in higher volatility, and the risk reversals are tilting bearish. The last time we saw this setup, the dollar dropped 5% in a month.
Strykr Watch
The Strykr Watch to watch are clear. DXY support at 103 is the line in the sand. Below that, 101 is the next stop. On the upside, resistance at 105 is formidable. The options market is pricing in a 1.5% move over the next two weeks, with skew favoring puts. The euro is testing 1.09, with a breakout targeting 1.12. The yen is flirting with 148, and a break below 147 could trigger a short squeeze.
On the macro front, keep an eye on the next round of CPI and PPI data. If inflation surprises to the upside, the Fed may be forced to get more hawkish, which could support the dollar in the short term. But if growth data disappoints, the risk is to the downside. The bond market is already flashing warning signs, with the 2s/10s spread still deeply inverted.
The risk is that the market is underestimating the impact of tariffs. If supply chain disruptions worsen, inflation could reaccelerate, forcing the Fed’s hand. Alternatively, if the global economy slows, the dollar could catch a bid as a safe haven. But the balance of risks is shifting. The dollar is no longer a one-way trade.
On the opportunity side, the asymmetric payoff is in betting against the dollar if support breaks. Long euro, long yen, and even long gold are all viable plays. The options market offers cheap convexity for those willing to fade the consensus. The real edge is in timing the break. If DXY cracks 103, the move could be swift.
Strykr Take
The dollar’s safe haven status is not dead, but it’s on life support. The combination of tariffs, inflation, and shifting global flows is a toxic cocktail. If you’re still long the dollar, it’s time to reassess. The next move could be violent. Don’t get caught on the wrong side of history.
datePublished: 2026-02-16T21:45:00Z
Sources: Wall Street Journal, US CPI data, Strykr Pulse proprietary analytics, DXY index data.
Sources (5)
Opinion | States Encroach on Prediction Markets
The CFTC, the legitimate regulator of these financial instruments, backs Crypto.com in a lawsuit appeal.
AI Turns From Friend To Foe - Will AI Kill The Bull Market?
Last week, fears of AI damaging long-standing business models expanded into wealth management, logistics stocks, and financial stocks, and there were
Shipping Stocks Are Moving Again — And Nobody Is Watching
Shipping stocks are quietly staging a comeback — and the underlying supply-demand setup suggests this cycle may have staying power. The Baltic Dry Ind
Small Caps Are Finally Waking Up — And It's Sending A Big Macro Signal
Chart created using Benzinga Pro
Energy Stocks Are Printing Cash — So Why Are They Still Cheap?
Energy companies are generating some of the strongest cash flows in the market — yet their valuations still reflect recession-level pessimism.