Dollar Oil inverse relationship

Over the last year or so almost everyone’s been pointing to the inverse relationship between the US dollar and crude oil. In a special issue of Currency Snapshot we included a chart that showed the recent breakdown of this correlation. Here’s an updated chart:

At the very left of the red and grey triangle we’ve drawn onto this chart is where the tight inverse correlation began to break down. That’s when the dollar bounced higher from its all-time low. Crude soared well beyond its record high at the same time.

Crude rallying and the dollar drifting slowly higher simultaneously? That’s certainly no inverse correlation.

But from the furthest right point of that red and grey box is where the tight inverse correlation has resumed. Only this time, the direction is in favor of the dollar. And it comes exactly after a new all-time high for crude prices.

A major turning point?