Markets under pressure as hawkish Fed keeps risk assets in consolidation [Video]

Gregor Horvat Wavetraders

Good morning everyone. As you know, we are seeing some risk-off moves this week, continuing the decline that started after last Wednesday’s FOMC, when the Federal Reserve turned out to be more hawkish than expected. With PCE data due tomorrow—one of the Fed’s key inflation indicators—stocks are likely to remain in consolidation for now.

At the same time, US Treasuries are also stuck in a range. Looking at the 10-year, and especially the 2-year yield, yields have effectively retested recent highs. This is one of the reasons the dollar continues to push higher, maintaining its bullish sequence.

We have seen a strong extended leg to the upside that resembles a third wave from last Monday’s move. A pullback would be normal at this stage, especially as price appears to be completing a fifth wave within an extended third wave structure. However, any deeper retracement would most likely represent a fourth wave correction within the broader uptrend.

Support is seen in the 100.45–100.80 area on dips, while the invalidation level remains at 99.50.

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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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