A Potential Dollar Sell-off This Week

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THIS WEEK FOCUS

Looking at the price development of the US Dollar Index (DXY), we are anticipating a potential Dollar sell-off this week. The catalyst can come from tonight’s FOMC Meeting Minutes, or this Friday’s NFP and Average Hourly Earnings data.

At the start of this week, we saw 2 potential scenarios that can play out for the US Dollar –

Scenario 1 – price completed Wave iv and is now moving higher to complete the 5th wave up.

Scenario 2 – price has yet to complete wave iv and can potentially still see price moving lower towards 96.52 – 97.60 area.

We needed more information earlier this week to determine which scenarios will be of higher probability.

With the most recent price development, we are seeing an ending diagonal structure with a bearish divergence forming and thus giving us a higher chance that scenario 2 will be happening this week.

A break below 100.42, and more importantly 100.25, can see price easily test the 99.57 – 99.79 area.

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A self-taught trader, Kar Yong was once featured in Channel News Asia’s Money Mind Young Investor. He was also featured as a Social Guru on the eToro social trading platform where he led the path for more than a thousand traders in confusing market conditions by sharing his trading strategies through forums and blog posts. Today, he teaches his proprietary 4 Pillar Forex Trading Strategy to students from all over the world.

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