Elliott Wave: Dollar And US Yeilds Are Diverging

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Hey traders

I hope you enjoyed the weekend, maybe watching the EURO 2024. I enjoyed watching our country yesterday, and by the way, I will also visit Germany this week for a live match between Slovenia and Serbia. Cant wait!

Regarding the market, we have seen the US dollar recovering last week after some hawkish remarks from Powell, who said that just month of good inflation data may not be enough for cutting rates. This is one of the reasons why the US dollar is turning to the upside. However, it’s important to note that US yields are still very bearish and diverging from the US dollar. Therefore, I think that this week, we should see that one market will catch the other. Maybe even the US dollar could potentially see a turn to the downside because what we are seeing in the S&P 500 is still an ongoing uptrend.

Also, keep in mind that the dollar index has three waves up from its lows, so this can easily be a corrective price action that can put bears back in place, especially if we dip back to the 105 area. With summer ahead, I really don’t believe that we will see any kind of real strong breakout on the dollar. We may  just chop around rather than break impulsively higher.

With lower US yeilds, I also think that metals may come into some strong support. I like price action on silver so far, which can be corrective.

Don’t forget, we have plenty of economic data this week: the RBA, SNB, BoE rate decision, as well as CPI data from the UK and Japan.

I will discuss this and much more in our webinar today, Monday, at 15 CET.


On the date of publication, Gregor Horvat did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.