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Elliott Wave analysis: Dollar is sell, but from higher levels

Gregor Horvat Wavetraders

I hope you had a wonderful weekend. We had some sunny days this weekend, which I spent at the seaside with friends and family, but now it looks like there will be some rainy days ahead. That’s fine we’ll spend more time at the screens, and I’m sure the markets will be interesting.

We have the Fed on Wednesday, and while they’re not expected to cut interest rates, Trump has been putting pressure on Powell, so who knows maybe there will be a surprise. Personally, I don’t think they will change rates, despite the lower-than-expected advanced GDP reading last week, because on Friday we got better-than-expected jobs data.

Basically, what happened is the dollar rallied, which was technically expected as we were looking for a wave C bounce. More importantly, we also saw higher yields at the same time, so I’m wondering if the positive correlation between the US dollar and yields is back. If that’s the case, and if US yields really have room for more weakness, then I’m afraid this wave C on DXY could still extend further, but then later this week I would assume dollar trend will turn again lower. Higher TF trend is still bearish USD, so there can still be interesting short opportunities, but from around 101.

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Author

Gregor Horvat

Wavetraders

Experience Grega is based in Slovenia and has been in the Forex market since 2003.

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