U.S. Dollar Could Rally Ahead of Important Economic Data
Gregor Horvat | Feb 21, 2023 02:04AM ET
The US Dollar Index is higher and keeps recovering since the strong US jobs data was reported for January and then also after worse-than-expected US CPI figures. Retail sales were also good for January so its seems that the fight against inflation is not done yet. Markets thinks that FED will have to be more aggressive, and some are even looking towards a 50bps increase on the next meeting.
So it's pretty simple; if economic data will keep coming out strong the dollar will be up, and stocks will be sideways or even bearish. So its very important to kee an eye on economic events and data. The next important numbers to watch will be PMIs today; it will be out for the UK, Europe and US. AS well as Existing Home sales later today, and then New Home sales for US on Friday.
Besides that there is FOMC meeting on Wednesday; a change in tone from Powell can shake the markets a lot. If we he will be hawkish we know that dollar will be up with US yields. On the other hand, if he will stick to previous comments then this will be seen dovish, and USD will most likely turn south.
From Elliott wave perspective we see EUR/USD in a higher degree correction after sharp turn down earlier this month, when price broke through the rising trendline support. Pair hit new lows then also at the end of last week, but notice that the decline is not progressing at this stage, due to the holidays in the US. As such, we can see some slow down and choppy price action before the downtrend resumes, so ideally that's still wave (B) now in progress. 1.08 remains an important resistance for a turn down into (C) wave.
If you ware interested in more analysis check our video below.
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