Dollar can stay In recovery mode, targeting 99
It’s already Friday, and so far this week we’ve had some very nice moves. As you know, yesterday the dollar saw another strong recovery after solid US data suggested there is no need to rush with cutting rates, which pushed the dollar and US yields higher. Looking at the dollar index price action from the September 17th low, when the Fed cut rates, we can still count only three waves up from the lows. This means the higher-degree recovery or trend reversal is not fully confirmed yet, but more upside could still follow—either in wave C or wave three, since we need a completed five subwave structure. The current third leg up from the 97.21 low could extend further then, maybe even closer to the 99 level, which is potential near-term resistance. If I’m correct, then other major currencies will likely see more weakness versus the dollar in the sessions ahead.
On the other hand, I would shift to a bearish outlook only if we suddenly drop back below 97.74.
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Author
Gregor Horvat
Wavetraders
Experience Grega is based in Slovenia and has been in the Forex market since 2003.
