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Methodology

4xForecaster derives a macro-driven directional view on the US dollar through a four-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.
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 Dollar Directional Bias
  • Synthesizes the regime state and rate structure 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
04 Pair Bias
  • Translates the USD directional bias into per-pair views for nine 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 four 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.