The US dollar (DXY) has been on a nice uptrend for all of 2021 such as we forecasted on January 6, 2021. As we close down the calendar year, this trend towards USD strength is mature but perhaps not quite complete.
Current DXY Elliott Wave
The rally from January 2021 is taking on the Elliott waveform of a double zigzag labeled W-X-Y. We are currently within wave ‘Y’ which is the second zigzag.
For those unfamiliar with the basic Elliott wave patterns, the zigzag is a three-wave a-b-c pattern that subdivides as 5-3-5. This means the first wave of the zigzag has five waves. The second wave has three waves and the third wave has five waves.
Wave ‘Y’ began in May 2021 with waves ‘a’ and ‘b’ complete. We are currently moving higher in wave ‘c’ which is the final wave of the larger ‘Y’ wave.
However, when I review this pattern, it appears we need another down-up sequence. As much as I am ready for the US dollar to turn towards weakness, it appears there may be another push towards strength and the 97-price level.
I am showing some wave relationship harmony up in the 97.75-98.65 level.
DXY Forecast Bottom Line
What makes this interesting is the seasonal tendencies is for the US dollar to weaken in December with strength returning in January.
Above, Seasonax has provided the seasonal tendencies for DXY going back the last 25 years. Therefore, the US dollar might soften a little to finish off the year, then provide one last rally for traders to exit before the big short comes on DXY.