ORIGINAL POST: 9:30AM
The dollar and the euro each overshot our short-term targets just a tad, but are resuming the path we mapped out for them last week.
The EURUSD came very close to a key .886 Fib level, prompting many to wonder “was that it?” I wasn’t so sure, myself. The resultant sell-off was pretty convincing, taking out the previous low. It reversed as we expected it would overnight, and appears to be taking a run at 1.2588. If it can break that level, it would complete a measured move to the .886 at 1.2617.
The dollar, meanwhile, bounced hard off the channel midline as expected, and has resumed its decline towards the 1.272/.5000 at 80.83 – 80.88.
Each of them is at a smaller degree .786 or so, meaning they’re due for a pause here. And, if they can’t seal the deal with a higher high (euro) or lower low (DX), then the party’s over sooner rather than later.
But, I’m still operating under the assumption that we’ll get one last push in this corrective wave before things come undone at Jackson Hole. I have yet to see any serious trial balloons regarding an imminent QE announcement. While not necessary, I would expect the very political Fed to do so, especially given the diatribe coming out of Tampa this week.
If DX and EURUSD are only in a corrective wave, can SPX break out to new highs as we wondered last week?
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