The overnight break below 79.06 certainly has dented the spirits of dollar bulls. However, from a wave count perspective, the medium-term outlook may not be so bearish. Let's take a look at one possible corrective scenario playing out in DXC that allows for higher levels in the days/weeks ahead.

Click on image to enlarge!

Some other notes from a technical perspective:

USD/JPY: we had noted that an 'expanded flat' correction was unfolding with 83.20 and 82.95 the downside targets. Thus far this has proven pretty accurate - the bigger question is whether or not we step in and be buyers here? At this point it makes sense purely from a technical standpoint, but with DXC and interest rate weakness, we would advise caution.

USD/SGD: continuing lower. Clients who have traded this pair with us in the past know that it is a real grinder, i.e. low volatility. That said, gravity has hold of this one currently with 1.2950 in the cross-hairs.

GBP/AUD: this was a 'Trade Idea' from yesterday and as of now it turned out to be far more robust that was expected. Clients who may have taken this trade should make sure they are locking in all or at least partial profits at current levels.

Rates and Bonds: as noted yesterday afternoon, rates appears to have topped while bond prices have bottomed. This may only be temporary, but the correction could be deep and thus it makes no sense to fight it. DXC may well come under sustained weakness.

DXC: the break below 79.06 cannot be ignored as it does force a re-count. The re-count that is possible still suggests the correction (Wave 2) off the November 30th highs is unfolding with 77.96 the new level with which to watch.

USD/CHF: Swiss strength continues its safe haven march below parity. The 0.9700/0.9750 resistance zone mentioned last night held quite well in what we view to be wave 4. Wave 5 down is in progress and should continue below the 0.9600 level.

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