Hello everyone! I hope you enjoyed the weekend and are ready for some new market action this week. We’ll kick things off with European CPI data and a Powell speach later today. Additionally, we’ll be watching the US ISM Manufacturing and Services PMI, but the most important data will come on Friday with the US NFP report.
Also, lets keep in mind that today is the final day of the month and quarter, so we could see some volatile price action. Those end-of-month flows tend to reverse in a few days, especially at the start of a new trading week. So, if we see a sharp dollar selloff today, there could still be some support later this week.
From an Elliott Wave perspective, the Dollar Index still shows a nice ongoing ending diagonal, and we’ve been expecting a final push to the downside, which now seems to be playing out. These patterns often lead to strong reversals, so don’t be surprised if we see the markets turn around soon, especially if stocks experience pullbacks after last week’s strong gains, driven by China’s stimulus policies.
Last week there was also sharp turnaround from 146.50 on USD/JPY following Shigeru Ishiba’s win to become Japan’s prime minister, who favors a strong JPY and higher rates. And I’m seeing very clear reversal patterns on several yen crosses, signaling potential for more donwside. This could present opportunities on the short side of these pairs, especially if stocks also turn lower this week for a pullback.
I talked about this and lot more in our video below.
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