US Dollar Strength Still in Focus as Treasury Reversal Signals Further Upside

Good morning, everyone. As you know, not a lot has changed since yesterday. Stocks are still holding up quite well, while the US dollar is also holding support, so it looks like this unusual correlation remains in play for now.

Overall, I still think that dollar strength will resume, especially when looking at the US Treasury futures. We are seeing a pretty solid reversal from the most recent swing highs around 110, and it looks like this is an intraday impulsive move that could lead to more weakness soon. Specifically, we are waiting for a break below the corrective channel support line, and that could make the dollar even stronger.

For now, the is showing only a three-wave pullback from the most recent highs, so we continue to treat it as a corrective setback. If the Dollar Index recovers above 101.00, then most of the major currencies will likely experience another round of weakness.

GH