US dollar is recovering in current risk-off sentiment due to a slow down on stocks, but don’t forget on an impulsive decline at the beginning of 2023, which we see it as first wave (A) of a minimum larger three-wave (A)-(B)-(C) decline. Now that treasury bonds, specifically 10Y US Notes is approaching support, US dollar could easily face resistance, as DXY/ZN (DXY against 10Y US Notes) ratio chart is still looking lower. So, we believe that current recovery is just a corrective one as an an A-B-C rally within wave (B), from where we should be aware of a continuation lower for wave (C). It means that US dollar could be back to bearish mode, while stocks and bonds may stabilize soon.
For a detailed view, check our video analysis recorded on August 21, where we talked about US dollar.
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