Dollar in consolidation, waiting for a breakdown [Video]

Markets remain fairly slow in the FX space, and even stocks have pulled back slightly, but overall not doing much at the moment. However, we could see some volatility later today, starting with the Canadian CPI, followed by UK CPI and the New Zealand rate decision tomorrow, and then the FOMC minutes on Wednesday. So, the second half of the week could bring more action.

For now, the dollar remains trapped in a consolidation phase that has lasted around 10 days. It still appears to be wave B, which could become a bit more complex. Sooner or later, I expect a new leg lower—either from a triangle or slightly higher resistance near the 98.5–98.60 zone. It’s just a matter of time before the dollar resumes its downtrend.

Much of this will depend on equities, where I still expect more upside after the current pullback, while the US 10-year yield could see further weakness, possibly even moving closer to 4%, as we discussed in latest video.

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