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The action out of the dollar is not exactly blazing. But what I can say, with little doubt, is that it has none of the characteristics of a final Daily Cycle. If the prior Investor Cycle were still in decline, I can assure you that the dollar would have failed and well on its way below 79 by now. So although we’re yet to see an upside burst or continuation, the dollar should be fairly well supported on the downside here.
We still have a bullish chart working and we know from past Cycles that the dollar can “chop around” for a Cycle or two. And tomorrow is going to be a very telling day as the ECB announces it latest decision on interest rates, potentially opening the door for a change in policy. With the Eurozone inflation rate falling rapidly, while the Euro appreciates too quickly, the ECB might be forced to be a little more dovish in their commentary. As the path of least resistance for the Euro is lower, we could be in for a rather sharp move in the dollar tomorrow. Of course, markets can go either way.
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