Elliott Wave: Dollar trapped in range ahead of NFP on Friday

Markets stabilized a bit yesterday during the US session, and Asia followed a similar pattern, so it looks like the market may hold steady mid-week since US trading returns to normal on Tuesday, after Labor Holiday break. Keep in mind that at the end of last month, stocks were under pressure, and now traders are back rebalancing or adjusting portfolios, which is normal in a new month and after extended weekend, so this could be contributing to the current recovery. But still, we may not see any real trends yet, either in stocks or the dollar, as markets may stay sideways in consolidation ahead of tomorrow’s NFP report. This data will be very important since Powell hinted they could be looking to cut rates as he sees risks in unemployment. If the data confirms this view, the dollar could sell off, while stocks might also see some retracement at the same time (depending on how bad data would be). Looking at the wave structure, I still see this as a possible b-wave rally on DXY, with resistance around 98.20–98.50 where gains could be limited.

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