S&P 500 Valuation Puzzle: Dollar Devaluation and Fibonacci Resistance Unveiled

In a thought-provoking X post today, crypto analyst Daan Crypto Trades (@DaanCrypto) shed new light on the S&P 500’s ($SPX) valuation, adjusting for the recent drop in the U.S. Dollar Index ($DXY).

The analysis reveals that, despite appearing near all-time highs, the index is still approximately 12% below its early 2025 peak when accounting for dollar devaluation. This perspective hinges on the 0.618 Fibonacci retracement level acting as a significant resistance, challenging the bullish narrative dominating financial headlines.

The insight aligns with historical data from Investopedia, which notes a slight positive correlation (about 40% of the time) between the dollar’s value and the S&P 500 over the past two decades. This suggests that a weaker dollar can inflate stock valuations, masking underlying trends. Daan’s adjustment underscores a critical nuance often overlooked: true market performance may lag behind nominal highs, especially in a volatile forex environment. Recent CNBC data (June 9, 2025) further supports this, showing the S&P 500 rebounding to within 3% of its record high, hinting at potential consolidation or a breakout at this Fibonacci resistance.

Technical traders often rely on Fibonacci levels for predictive accuracy, as noted in educational platforms like Babypips.com, where these levels signal possible reversal points in trending markets. Daan’s chart, shared at 07:01 UTC, visually reinforces this, with the 0.618 level acting as a stubborn barrier. For investors, this could mean a strategic pause before the next major move—either a breakout to new highs or a pullback.

As the market digests this adjusted view, the interplay between dollar strength and equity valuations remains a key watchpoint.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.