US Dollar Pulls Back Toward Red Trendling Support, Could Form a Wedge Top Ahead
2025.01.16 06:12
Following the significant drop in the yesterday, the has pulled back toward the red trendline support, which marks the lower boundary of the wedge pattern we’ve been tracking. Ideally, this trendline could break if stocks are able to hold onto their recent gains.
Keep in mind that stocks saw a solid rebound after yesterday’s data, with coming in below expectations at 3.2% compared to the forecasted 3.3%. This softer inflation reading contributed to the market’s strength.
I’m closely watching the dollar for potential short trades because there appears to be an interesting opportunity for dollar weakness across the board if risk-on is really back. Also, Trump’s return to office can be volatile for the markets and can cause some dollar weakness, especially if we consider what happened in January 2017.
If the Dollar Index decisively breaks out of the wedge and slips below 108.60, it could open the door for more downside momentum. In such case, I may keep an eye on some commodity currencies
