Elliott Waves shows corrective wave four on DXY
The US dollar weakened slightly yesterday despite lower stocks, which remain in consolidation ahead of the key Fed decision—or more importantly, the press conference—where we may get more clarity on whether policy will become even more dovish. This is especially relevant given the sharp stock market drop in last few weeks amid uncertainty over Trump’s tariffs. If Powell sounds dovish, stocks could stabilize, US yields could ease, and the dollar could face even more downside pressure, as it is already in a strong impulsive sell-off.
Looking at the dollar index on the hourly time frame, the market only retested the previous lows around 103.25 and is now attempting to break out of the downward channel. This suggests that we could still be in a higher-degree, complex wave four consolidation, as discussed yesterday. If so, there is still a chance for a retest of the 104.10 to 104.30 resistance area. Above that, the key level to watch is 104.80, where wave four would equal wave two in length.
I'm still watching EURUSD for potential longs, but it's best to be patient and wait for the Fed decision first. After the event, we may get clearer opportunities to enter.
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Author
Gregor Horvat
Wavetraders
Experience Grega is based in Slovenia and has been in the Forex market since 2003.
