Good day to everyone!
The US dollar saw a strong move to the downside last week when the stock market recovered on positive speculation that Trump and his administration could meet with Ukraine and Russia to start negotiations to end the war. This would have a bullish impact on the market, so further upside in stocks could put additional pressure on the US dollar, especially if crude oil weakens. Lower crude=lower US CPI expectations.
Interestingly, we also saw some reversals in metals from ATH, suggesting that investors are not urgently seeking safe havens. Another reason for potential dollar weakness is the Trump administration’s decision to push for more “fair” trade tariffs.
Now looking at this week’s data, we will get some important announcements, including rate decisions from the RBA and the RBNZ, while in the US, investors will focus on details from the latest Fed meeting, though it is unlikely that we will get anything new. The Fed is expected to keep rates on hold, especially as inflation ticked slightly higher.
Dollar Index saw drop through the key 107 support, which we discussed last week. This is a very important level, and with a daily and weekly close below it, I think this could bring more weakness, as the third leg of a bearish impulse could now be in progress, possibly heading toward 106 in the next few days.
On the flip side, if someone wants to focus on bullish trends on the Dollar Index, I would suggest waiting for 108.50 to be broken before considering any shift in outlook.
GH
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