The below plot is a bi-density chart of the WTI spot rate versus the Fed USD Trade weighted index. The contour lines delimit the empirical joint distribution. The yellow line is the best fit derived from a quantile regression (akin to a measure of fair value). The dotted red lines delimit the quantiles for the Oil price. The bold red cross hair lines show where both the USD TWI and the oil Price is at the most recent point….
