Dollar Consolidates in Wave Four as T-Note Futures Rebound Ahead of US CPI

Good morning, everyone. We have seen a pretty nice reversal in the dollar over the last few sessions. It was a classic Monday move that often gets reversed by Tuesday, especially when Monday's markets are a bit thin, as was the case in the US due to the Columbus Day observance. We still see a lot of FX pairs trapped in ranges, which are most likely not going to see any major breakouts ahead of tomorrow's US inflation figures, so markets could remain a bit slow today as well.

What I like is the fact that we are seeing a pretty nice rebound in 10-year US Treasury note futures. It looks like we are moving slightly higher in wave four, which we discussed before, so resistance levels for wave C could still be retested around 105.50, maybe even 106, where we see a major potential reversal point for the next sell-off.

Until this resistance is reached, we could see the dollar consolidating a bit further. We still see a potential irregular formation here in wave four, which could unfold as a flat or even a triangle, keeping the market sideways for a bit longer. But the idea remains that we are expecting some stabilization closer to lower support levels before a new wave five higher in the dollar, which could then send other currencies like EURUSD and GBPUSD further to the downside.

If you missed yesterday's Elliott Wave Live, "Dollar in a Range Ahead of US CPI," you can watch the full replay below, where we went through the dollar wave four range and the key levels ahead of the CPI release. And make sure to join us live next Monday, October 19, at 15:00 CET for our next Elliott Wave Live webinar.

If you'd like to follow our analysis and my views on a daily basis, you're welcome to check out our premium services.

Trade well,

Grega