Markets stabilize into NFP as US notes exit wedge

Gregor Horvat Wavetraders

Markets are stabilizing after yesterday’s volatility, with stocks rebounding as US yields pulled back from their highs and expectations for further Fed tightening eased after the latest PCE data. The dollar is still strong, but position readjustments ahead of NFP today and going into the end of the week could cause some retracement. NFP will be important to watch; strong data could suggest that the Fed has room for more hikes, while weak data will likely push hike expectations even lower, and this could cause the dollar to pull back as US notes recover further into wave four.

We see 10-year US notes coming out of a wedge, which indeed could allow the dollar to make some kind of a pause soon.

However, we cannot confirm the end of wave five yet on DXY, but sooner or later we could see that higher-degree black wave four setback, which could also be supportive for stocks. NFP data could put the correlation between stocks and the dollar back to normal, at least temporarily.

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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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