diff --git a/CONTRIBUTING.md b/CONTRIBUTING.md
index 5b10c66..e713955 100644
--- a/CONTRIBUTING.md
+++ b/CONTRIBUTING.md
@@ -44,10 +44,31 @@ Only the higher layer is accessible to other classes of dotdrop.
 **Rules**
 
 * `dynvariables` are executed in their own config file
+* since `variables` and `dynvariables` are templated before the `dynvariables`
+  are executed, this means that `dynvariables` can safely reference `variables` however
+  `variables` referencing `dynvariables` will result with the none executed value of the
+  referenced `dynvariables` (see examples below)
+* a `dynvariables` can reference a `variables` however the opposite is not possible
 * profile cannot include profiles defined above in the import tree
 * config files do not have access to variables
   defined above in the import tree
 
+This will result with `var0 = "echo test"` and not `var0 = test`
+```yaml
+variables:
+  var0: "{{@@ dvar4 @@}}"
+dynvariables:
+  dvar0: "echo test"
+```
+
+This will result with `dvar0 = "test"`
+```yaml
+variables:
+  var0: "test"
+dynvariables:
+  dvar0: "echo {{@@ var0 @@}}"
+```
+
 **Precedence**
 
 * `dynvariables` > `variables`
@@ -100,9 +121,9 @@ How variables are resolved (through jinja2's
 templating) in the config file.
 
 * resolve main config file variables
-  * `variables` and `dynvariables` are recursively templated
+  * merge `variables` and `dynvariables` (allowing cycling reference)
+  * recursively template merged `variables` and `dynvariables`
   * `dynvariables` are executed
-  * both `variables` and `dynvariables` are merged
   * profile's `variables` and `dynvariables` are merged
 * resolve *included* entries (see below)
   * paths and entries are templated
diff --git a/dotdrop/cfg_yaml.py b/dotdrop/cfg_yaml.py
index 424b552..719ddc2 100644
--- a/dotdrop/cfg_yaml.py
+++ b/dotdrop/cfg_yaml.py
@@ -140,13 +140,31 @@ class CfgYaml:
         self.variables = self._enrich_vars(self.variables, self._profile)
         self._redefine_templater()
 
+        # variables and dynvariables need to be first merged
+        # before being templated in order to allow cyclic
+        # references between them
+
         # parse the "variables" block
         var = self._parse_blk_variables(self._yaml_dict)
-        self._add_variables(var, template=True)
+        self._add_variables(var, template=False)
 
         # parse the "dynvariables" block
         dvariables = self._parse_blk_dynvariables(self._yaml_dict)
-        self._add_variables(dvariables, shell=True)
+        self._add_variables(dvariables, template=False)
+
+        # now template variables and dynvariables from the same pool
+        self._rec_resolve_variables(self.variables)
+        # and execute dvariables
+        # since this is done after recursively resolving variables
+        # and dynvariables this means that variables referencing
+        # dynvariables will result with the not executed value
+        if dvariables.keys():
+            self._shell_exec_dvars(self.variables, keys=dvariables.keys())
+        # finally redefine the template
+        self._redefine_templater()
+
+        if self._debug:
+            self._debug_dict('current variables defined', self.variables)
 
         # parse the "profiles" block
         self.profiles = self._parse_blk_profiles(self._yaml_dict)
diff --git a/tests-ng/dynvariables.sh b/tests-ng/dynvariables.sh
index acbb71f..89527ba 100755
--- a/tests-ng/dynvariables.sh
+++ b/tests-ng/dynvariables.sh
@@ -69,10 +69,12 @@ config:
   dotpath: dotfiles
 variables:
   var1: "this is some test"
+  var2: "the_dvar4"
 dynvariables:
   dvar1: head -1 /proc/meminfo
   dvar2: "echo 'this is some test' | rev | tr ' ' ','"
   dvar3: ${scr}
+  dvar4: "echo {{@@ var2 @@}} | rev"
 dotfiles:
   f_abc:
     dst: ${tmpd}/abc
@@ -89,17 +91,19 @@ echo "{{@@ var1 @@}}" > ${tmps}/dotfiles/abc
 echo "{{@@ dvar1 @@}}" >> ${tmps}/dotfiles/abc
 echo "{{@@ dvar2 @@}}" >> ${tmps}/dotfiles/abc
 echo "{{@@ dvar3 @@}}" >> ${tmps}/dotfiles/abc
+echo "{{@@ dvar4 @@}}" >> ${tmps}/dotfiles/abc
 echo "test" >> ${tmps}/dotfiles/abc
 
 # install
 cd ${ddpath} | ${bin} install -f -c ${cfg} -p p1 -V
 
-#cat ${tmpd}/abc
+cat ${tmpd}/abc
 
 grep '^this is some test' ${tmpd}/abc >/dev/null
 grep "^MemTotal" ${tmpd}/abc >/dev/null
 grep '^tset,emos,si,siht' ${tmpd}/abc >/dev/null
 grep "^${TESTENV}" ${tmpd}/abc > /dev/null
+grep '^4ravd_eht' ${tmpd}/abc >/dev/null
 
 #cat ${tmpd}/abc