US Yields Near End of Wave Three as the Dollar Completes Five Waves Up

Apply for a free 7-day WaveTraders trial and get full Elliott Wave charts and commentary across marketsGood morning everyone. It’s already Friday and the end of the week, but we could still see some interesting moves ahead. Yesterday, crude oil was on the rise as there were still some disagreements between the US and China, but overall the meeting was positive. Stocks also started to recover as soon as Trump and Xi appeared and delivered their remarks, and so far that recovery remains in place.

However, when looking at US yields and the dollar, we still see some disconnect from stocks. Several Fed members over the last 24 hours have highlighted that more may need to be done to bring inflation back towards the 2% target, which is helping the dollar hold its gains. Looking at the US 10-year Treasury note, we could now be moving into the late stages of a fifth-wave decline within an extended wave three. This week's decline also came out of a triangle, so some stabilization and a wave four recovery could be approaching.

The Dollar Index is showing a similar picture, as we can now count five waves up from the recent lows. So we think the dollar could pause or pull back a bit in the near term, but after a three-wave correction we would continue to look for higher prices. At the same time, US yields could see another push higher once Treasuries complete a wave four recovery.

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Grega