Markets stabilize after Nvidia earnings as Dollar tests key resistance

Let’s begin today’s outlook with a brief rundown of the key market moves shaping sentiment this week. Markets were mostly trading in a risk-off mode this week, ahead of FOMC minutes which showed a lot of disagreement, suggesting that a December cut could easily be on hold. However, markets were saved just a few hours later when Nvidia released earnings after the US close and the numbers beat expectations, so it's not a surprise that stocks have seen a rebound. The dollar has also been firm in the last few sessions, but some currencies are holding up much better than others. What really stands out is USDJPY, which pushed towards the 158 area, and maybe this move also impacted other dollar pairs.

Looking at the updated wave structure on the Dollar Index, you can see that there is still some serious resistance that could limit the upside. The updated wave count shows a potential diagonal formation, which is not ideal, but due to the overlaps we have to consider that there is still a chance for the market to slow down. If we are in a fifth wave, then the 100.50 up to 101.60 area is important to watch. If this zone holds and the index turns down, then of course other dollar pairs will follow. And don’t forget we have the NFP later today at 14:30 CET.