Good morning everyone, and I hope you had a wonderful weekend.

Markets are starting the week in a bit of a risk-off tone—stocks are coming slightly lower, reversing after Moody’s downgraded the US credit outlook over the weekend.

Interestingly, the dollar also sold off, opening with gaps across the board, which— as we know—can eventually be filled. Still, we could see a return of risk-on sentiment later this week, especially if we consider that the US House panel has approved Trump’s proposed tax cuts. While it’s not a final decision yet, it could be passed later this week.

From an Elliott Wave perspective, we’ve been tracking this potential bearish reversal on the Dollar Index for all of last week, and so far the price action supports that view. We’ve seen three waves up from the April lows, and now also a minor three-wave structure up from the May 14th low, which could be subwave two. That opens the door for a strong reversal or continuation lower—possibly into wave three of an impulse.

So this week, I think the dollar could stay under pressure. Of course, some of the weekend gaps may still be filled on intraday bounces, but overall, I believe we’re in a fifth wave decline, which could soon accelerate.

Join me in webinar today at 3pm CET

Grega