Dollar Slips as ECB and BOE Hawkish Tone Lifts Euro and Pound

Good morning everyone. It’s already Friday, but with this volatility the market can still become very interesting into the last part of the session.

What’s happening? The dollar index has moved to the downside, something we have been warning about in previous updates. This move came as the euro and pound both pushed higher yesterday after the ECB and Bank of England rate decisions and press conferences. As you know, they are still concerned about inflation, so central banks may stay on hold for longer, and in some cases even consider rate hikes if energy prices remain too high for too long. That supported EUR and GBP, and pushed the dollar index lower.

What is important now is that we only have three waves down from the recent highs on the dollar index. In Elliott Wave terms, when you see a strong five wave recovery followed by only a three wave pullback, you should be aware of a potential stabilization and a move back to the upside. We could already be bottoming around 99.05, which was a pivot level of the previous wave four range. However, there is also deeper support around 98.48 that could still be retested in this wave 4. For me, it’s still a bit tricky to look for longs here, especially on a Friday. But if next week we see a retest of the 99 area, I would be much more interested in looking for  setups. Overall, I still think the dollar index will sooner or later find buyers again, especially with ongoing weakness in stocks and metals.

GH

We encourage you to check out our previous daily morning updates – as DXY has been following our projections to the tick! – https://wavetraders.com/blog/dollar-retreats-ahead-of-fed-as-middle-east-oil-shock-clouds-policy-outlook-mar-18-2026/

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