Wednesday, January 16, 2019
Home > Articles > The US Dollar continues its drop

The US Dollar continues its drop

US money | EconAlerts

The USD continued to drop against some of its major counterparts yesterday, as president Trump’s recent comments continued to weigh on the greenback. Also, note that a slight US political instability with former associates of President Trump facing judicial problems did not help the greenback. The Dollar’s next turning points could be the release of the FOMC’s meeting minutes but also the much-awaited trade negotiations with China. Analysts, point out though, the possibility for the negotiations to keep a low profile as they are to be conducted at a low to medium level. Should there be positive signals coming out of the negotiations about the improvement of the US-Sino trade relationships, the USD could weaken even further.

EUR/USD rose breaking the 1.1537 (S1) resistance level (now turned to support). Technically, it should be noted that the pair steepened even further its upward trend-line incepted since the 15th of August. Also note, that the RSI indicator remains above the reading of 70 in the 4-hour chart, indicating an overcrowded long position. We continue to have our bullish bias for the day, however, as mentioned before the pair could prove sensitive to the release of the FOMC meeting minutes later. Should the bulls continue to dictate the pair’s direction, we could see it breaking the 1.1623 (R1) resistance level and aim for the 1.1675 (R2) resistance barrier. If the bears take over we could see it
breaking the 1.1537 (S1) support level and aim for the 1.1482 (S2) support hurdle.

Brexit negotiations to intensify

Michel Barnier, EU’s chief Brexit negotiator, stated that negotiations are now entering the final stage and that common ground could be found if Britain respects the single market. He also stated that the UK and EU will negotiate on Brexit continuously from now on, however, a delay may occur on the October deadline and in any case the negotiations are to be concluded well before year-end. On other headlines, London seems to keep reigning as a currency world capital, despite fears in the past of getting a blow in case of a hard Brexit. Also, UK confidence got a boost yesterday as the UK budget posted the biggest surplus for July in a number of years, allowing the Chancellor for the Ex-Chequers to plan more spending before Brexit. Should there be further positive headlines about Brexit we could see the pound gaining further ground.

GBP/USD rallied yesterday and broke the 1.2895 (S1) resistance line (now turned to support). For the time being, we retain our bullish bias and to lift it we would require the pair to break the upward trend-line incepted since Monday. Technically, it should be noted that the RSI indicator in the 4-hour chart has surpassed the reading of 70 indicating a rather overcrowded long position for the pair. Should the pair continue to stir the market’s buying interest we could see it reaching, or even breaching the 1.2960 (R1) resistance level. Should the pair come under selling interest though, we could see it breaking the 1.2895 (S1) support line and open the way for the 1.2825 (S2) support level.

In today’s economic highlights:

In the European session, UK’s Inflation hearings could be an interesting event for the pound, while in the American session, we get Canada’s retail sales growth rates and from the US the existing home sales figure for July. As mentioned before, the FOMC meeting minutes will be released and please note that the EIA weekly crude oil inventories figure is to be released and could move the oil market. For more info regarding the oil market please refer to our Oil Weekly outlook due out later today.

TRADE THE MARKETS     RECEIVE A WELCOME BONUS     US TRADERS

All trading involves risk. It is possible to lose all your capital

 


Disclaimer:
This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.


source: FXGiants

 

Leave a Reply

Your email address will not be published. Required fields are marked *