Good morning everyone.
The situation in the Middle East is still not improving, and there are speculations that the conflict could last longer than initially expected. In that environment, stocks may continue to consolidate while the dollar stays supported as a safe haven, especially as many investors and traders may reduce exposure ahead of the weekend, which always carries additional risk when markets are closed. With that in mind, it would not be surprising to see markets move more into cash and safe havens, which could keep the dollar in recovery mode. At the same time, geopolitical tensions are also raising inflation concerns. This means the Fed may be less willing to cut rates. Plus, tomorrow we also have the NFP report, and if job numbers come in strong, it is very possible we will see another push higher in the dollar. A strong labor market would reduce the chances of rate cuts even further, especially now when higher oil prices could add more inflation pressure.
From an Elliott wave perspective we have also seen nice move back into that wave four support on DXY, so sooner or later wave five can show up.
Grega
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