How much further can the Big Dollar Drop?
Following Fed Chair Powell's speech at Jackson Hole, the USD index, the DXY, is trading at 100.55, on track for its largest monthly fall in 21 months.
The narrative is that the Fed's sole focus on the labour market and zero tolerance for any further increases in the U/R has reactivated the Fed Put, which presents a significant headwind for the USD.
Zooming out to the monthly chart it can be viewed that the DXY completed a multi year five wave advance at the 114.77 high from Sep 22.
A sustained break of critical medium-term support at 99.50 would open up a move lower towards 92.00, about 8 ½ % below where it is trading now as it traces out the third leg (Wave C) of a three wave correction.
The narrative is that the Fed's sole focus on the labour market and zero tolerance for any further increases in the U/R has reactivated the Fed Put, which presents a significant headwind for the USD.
Zooming out to the monthly chart it can be viewed that the DXY completed a multi year five wave advance at the 114.77 high from Sep 22.
A sustained break of critical medium-term support at 99.50 would open up a move lower towards 92.00, about 8 ½ % below where it is trading now as it traces out the third leg (Wave C) of a three wave correction.
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