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Methodology

4xForecaster derives a macro-driven directional view on the US dollar through a five-layer analytical chain. Each layer conditions the next. The output is a framework bias — not a trade signal.

01 Volatility Regime
  • Monitors bond rate volatility state and equity volatility (VIX) to classify the current market environment.
  • Classifies regime as Clear, Caution, or Stress based on the state of both inputs.
  • The regime sets conviction caps for all downstream layers — full conviction is only possible in Clear.
  • Data sources: Bond rate volatility is derived from Treasury yield realized volatility (rolling 20-day standard deviation of daily yield changes). Equity volatility uses the CBOE VIX index, sourced daily from FRED (series VIXCLS). Regime classification thresholds are fixed and documented internally; no threshold changes occur without a changelog entry.
Clear Caution Stress
02 US Rate Structure
  • Tracks the front end (3-Month, 2-Year) and long end (10-Year) of the US Treasury curve.
  • Curve shape — flat, steepening, or inverting — and rate momentum signal where capital flow pressure is building.
  • Front-end and term-structure states are evaluated independently to capture divergence across the curve.
Steepening Flat Inverting
03 Cross-Asset Confirmation
  • Observes equity sector rotation — defensive vs. cyclical leadership, financials vs. utilities — to test whether risk-asset behavior confirms or contradicts the rate-structure thesis.
  • Sector alignment with the rate-curve reading reinforces downstream conviction; sector divergence caps it and often precedes a regime transition.
  • Output is one of three states — Confirming, Mixed, or Contradicting — feeding directly into the dollar bias layer below.
Confirming Mixed Contradicting
04 Dollar Directional Bias
  • Synthesizes the regime state, rate structure, and cross-asset confirmation into a directional view on the US dollar.
  • Output is one of four states — Bullish, Bearish, Sideways, or Uncertain — with an integer conviction level (1–4).
  • Conviction is capped by the active regime; Stress environments suppress all signals regardless of rate alignment.
Bullish Bearish Sideways Uncertain
05 Pair Bias
  • Translates the USD directional bias into per-pair views for twelve major and emerging-market currency pairs.
  • Each pair is weighted by its primary driver channel — RATES, CARRY, RISK, or ENERGY — reflecting its structural relationship to USD.
  • G10 and EM pairs receive differentiated biases; pairs with weaker USD sensitivity may diverge from the headline dollar view.
RATES CARRY RISK ENERGY

Conviction Scale

Conviction is expressed as an integer from 1 to 4 (rendered as filled dots: ●○○○ to ●●●●). A score of 4 requires alignment across all five layers and a Clear regime. Caution regimes cap at 3; Stress regimes cap at 1. The framework does not produce binary buy/sell calls — conviction reflects confidence in the directional reading, not position sizing guidance.

Data Cadence

Three cadences govern the dashboard:

Source cadence — how often each input updates at the source. Treasury yields update intraday via market data feeds. VIX updates intraday, but the dashboard uses the prior daily close from FRED (series VIXCLS). NFCI updates weekly (Wednesday, covering the prior Friday). DXY updates intraday.

Dashboard refresh cadence — how often the dashboard recalculates. The dashboard refreshes derived signals when new source data arrives, reflecting the slowest input in each layer.

Publication cadence — when official bias calls are issued. Calls publish at 06:45 UTC (pre-London) and 14:15 UTC (post-New York). These are timestamps of record. Intra-day dashboard state is indicative, not official.