We have a very important week ahead, with the much-anticipated interest rate decision from the Fed. The focus is not just on whether they will cut rates, but by how much—will it be 25 or 50 basis points? A 25 basis point cut could strike a balance between inflation concerns and potential recession fears, especially considering recent unemployment figures weren’t that bad, and CPI also softened as expected last week. Keep in mind that the dollar has moved lower over the last few weeks, and if we see a 25 basis point cut, the dollar could gain slightly. However, if the Fed opts for a 50 basis point cut, we expect the dollar to continue its downward trend immediately.
From an Elliott Wave perspective, I certainly think that the dollars will break lower, though there could be some intraday rallies in the meantime. Also, let’s not forget on the stock market; it has performed well, with a nice rebound last week, while US yields continue to press lower. So, risk-on sentiment is here and it may not be over just yet. Also, let’s not forget on the euro which has recovered after last week’s ECB rate decision. So everything seems to be pointing to a dollar decline to 100.
Join me in webinar later, where I will cover this and plenty of other markets. We start at 15CET!
Grega
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