Risk-On Sentiment Dominates Markets Amid Easing US Inflation
Global markets continue to exhibit risk-on sentiment as easing US inflation bolsters expectations that the Federal Reserve will maintain interest rates at current levels.
This environment has been particularly favorable for technology and AI-related stocks, which are leading the advance. The absence of significant economic reports scheduled for today may result in relatively quiet trading activity heading into the weekend.
From a technical perspective, 10-Year US Treasury Notes have been recovering, contributing to the recent weakness in the US Dollar Index (DXY). However, this upward movement could still be part of an abc pullback in wave 'b', leaving room for one more decline in wave 'c'. Such a move may trigger a larger recovery or a period of sideways consolidation in the US dollar.
Additionally, the DXY may have completed its projected abc irregular flat correction in wave 'iv'. A break below 99.28 would strengthen the case for a new decline in wave 'v', potentially indicating that the 10-Year Treasury Notes have formed a bottom within a diagonal pattern. A stronger rally toward the 110 area could provide additional confirmation and put pressure on the US dollar.