The USD is making some strong moves across the board, as USD Index can be making a big wave three to the upside. The only surprise this morning was German DAX which was closed yesterday for holiday, so we have seen some nasty price moves. The index rallied to new highs before it lost nearly 250 points. However, we see the trend from the last two weeks as bullish so it may be worth to keep an eye on that gap from May 19th that can cause a new swing, ideally to the upside.
USD Index Elliott Wave Analysis
DAX gap
We also need to keep in mind that the USD Index and DAX are showing positive correlation because of strong negative correlation between EUR and DAX since ECB started with QE. But today, we see some divergence on the chart below, so the question is which one is correct. Well, we suspect that the EURUSD will continue south which can limit weakness on German DAX.
USD Index vs DAX
