After a strong rally in early 2019, commodities seem to have taken a breather in recent sessions. Since mid-January 2019, due to increased global macro headwinds, as well as slowing economic activity in Europe and China, commodities (DBC as a proxy) have been treading water against key safe haven assets such as the US Dollar (Chart 1) and US treasuries (Chart 2).
As can be seen in Chart 1 below, when commodities are measured against the US Dollar, the price ratio (DBC/UUP) failed to move higher in recent sessions, and is struggling to re-test its 20-Day EMA (Green) and 50-Day EMA (Blue). Moreover, in Chart 2, a similar pattern emerges when commodities are compared against US Treasuries. The price ratio between commodities and US Treasuries (DBC/IEF) moved higher since early 2019, but failed to break higher above its 50-Day EMA and is also struggling to clear this important hurdle.
It seems that commodities are at a crossroads at the moment, in that the asset class is trying to break its 50-Day EMAs against the US Dollar and US Treasuries respectively. If commodities can break through these levels, expect the asset class to move higher in the short-term. If not, or if global economic indicators do not improve over the next few weeks, expect more downside in the near future.