Elliott Wave Analysis of the US Dollar Index (DX) by Sid from ElliottWavePredictions.com

US$ daily 12-14-12

Elliott Wave Analysis of the US Dollar Index (DX) by Sid from ElliottWavePredictions.com.  Click on the chart twice to enlarge.

The Dollar has weakened a bit further since the Fed announced Wednesday that they would double the amount of monthly printing of dollars moving forward, which begs the question: Is the Fed big enough and powerful enough, and do they have the prolonged political backing to be able to offset the super-strong and apparently strenghtening deflationary pressures? I think we’re about to find out.

The dollar has now retraced once again into the .66-.81 typical retracement zone for wave 4 of a diagonal, and is likely to close the week there. If the dollar weakens further through next week below pink 4 invalidation at 78.93, the alternate count shown will become the main, and a larger downside move is likely underway, with a common sense target of 76.17, where black 2 will have retraced .618 of wave 1 black. If however the Dollar strengthens by the end of next week without taking out pink 4 invalidation first, the main count of a leading expanding diagonal for blue wave 1 is still preferred.

Also worth noting, the “Weak Dollar = Strong Equities” correlation appears to have severed for now . .