Forex Opinion & Analysis

U.S. Dollar Consolidates, Could Break Lower

In my previous article, I mentioned that the US dollar index had ticked six boxes to be likely to revert its upside correction and resume falling to historical lows.

Presently, it is locked in a range, mostly due to the FOMC release today. Last Friday it rallied strongly, we are still left with a question as to what pair, besides the EUR/USD, fell to that proportion.

The fact it had such a big oscillation without support from its correlated pairs characterizes a technical consolidation, which we prefer to say is the 7th box ticked for the greenback to fall.

With our signal muted, and Elliot Wave Count still to be confirmed with the break below 93.245, we then take a look at what Hurst Cycle can say of its fate.US Dollar Index daily chart.

Hurst Cycle Analysis

Since mid-September, Hurst has been diverging from the dollar, in which case, our experience shows consolidation is likely to break out in favor of the cycle.

Hurst suggests the next stop for the index is by the end of December 2022 near the 90.000 levels, in an optimistic scenario.

Should the Fed’s decision induce a downtrend, there will be little strength for it to hold at the Fibonacci resistance above 93.370.

US dollar index daily hurst cycle.

Conclusion

With the S&P 500 making new highs and 7 technical criteria indicating a reversal in the US dollar, we are neutral to bearish, waiting for a breakout from the consolidation to the downside.

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