If we take a look at the weekly time frame we can see that price has concluded the ABC correction at 103.82 and began to work its way down. On the daily time frame above, I have identified the completion of a 5 point Eliott impulse wave and has begun ascending towards my 38Fib level. From here, we could potentially see another ABC correction that would give me further confirmation on the bearish movement awaiting the Dollar. DXY 0.02% closed at above 93 today, while the low for this year was 88 which puts us at about 5% growth for the year. We've had a considerable rally in a relatively short period of time, and to me, it has all the makings of a bear market rally. We haven't had any positive news that explains the strength of the dollar when considering stagnant wage growth, low job creation numbers, and the tolerance of increasing inflation rates being put forth. All of this information would argue for a more aggressive Fed, yet the dollar continues to rise. If certain adjustments aren't made the United States can expect to have rising inflation and a weakening dollar. When faced with this situation, the Federal Reserve won't be able/willing to increase interest rates to deal with inflation for political reasons. Of course, this is speculative on my end as QE3 could be launched and a few other scenarios could play out. I will be keeping a close eye on the index as it will determine my positions on pairs such as EURUSD 0.01% , USDJPY -0.03% , XAUUSD -0.13% .
As always, trade with caution and cover your risk.
Comment below any thoughts or biases you might have on DXY 0.02%
As always, trade with caution and cover your risk.
Comment below any thoughts or biases you might have on DXY 0.02%
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The link for the Daily Chart is listed at the bottom of the post