Traders have been waiting on this week for a long time, a week of volatility and opportunities as central banks will most likely move the markets.
FED, ECB and BoE are going to move the markets with their latest decision on interest rates. Dollar has been turning south heavily over the last few months on speculation that FED is going to stop the hiking place this year. But question is if will they stick to the plan? Keep in mind that market moves the moves on surprises. And the FED is surely watching the inflation across the globe and this one is not be a “done deal” yet when looking at Australia or Spain. So if Fed will give any kind of a signal that they will do a lot more on rates if inflation turns up on next report, then we know that USD will see a jump in price with US yields. In fact, US yields are already turning higher much more than the USD, so technically correction is already here, and the DXY may try to follow the same pattern. From an Elliott wave perspective we see five waves down, now moving into a support so correction should be a surprise either.
If DXY turns up, then I would watch EURUSD for much lower prices as pair trying to form a wedge. On the opposite side of this; if DXY will see another sell-off and bears even accelerate then keep an ey eon USDNOK and its bearish HS pattern.
EURUSD Elliott wave count
USDNOK H&S pattern
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