Forex News: US Dollar Back with a Vengeance, Finishing the Week Lower
Forex News: Yesterday the US Dollar continued the momentum started a day before by the hawkish Yellen press conference and the pair had a strongly bearish session, breaking support decisively.
The bears are definitely winning the short term battle on the back of US Dollar strength but the pair is approaching an important hurdle represented by the support at 1.1120. Last time the pair touched this support, it bounced strongly to the upside, so the same scenario may happen again. If that is the case, we will probably see a move into 1.1170, which may turn into resistance. As long as the pair is trading below 1.1170, our bias is bearish, anticipating a move into 1.1075.
The Euro will be affected today at 9:00 am GMT by the release of the Final version of the Eurozone Consumer Price Index. This is the least important version of the CPI, but still, numbers above the forecast 1.4% can strengthen the currency.
On the US Dollar side we have the University of Michigan Consumer Sentiment, a survey that gauges the opinions of consumers about overall economic conditions. The time of the release is 2:00 pm GMT and the expected number is 97.2; usually a reading above expectations strengthens the greenback.
The Bank of England kept the rate unchanged as expected, but surprisingly, 3 out of the 8 MPC members voted for an increase. This generated Pound strength but some of the gains were erased soon after.
The pair continues to show choppy price action and although volatility is pretty high, the direction is unclear. Yesterday’s price action shows rejection at the 50 period Exponential Moving Average and the pair is trading below 1.2770 resistance but on the other hand, the Pound is fuelled by the hawkish change in stance of the MPC voting members, so overall the pair is in neutral territory. As long as price remains below the 50 EMA, our bias is slightly bearish.
The United Kingdom didn’t schedule any important releases for today, so the main focus will be on the technical side but the pair will be influenced by the U.S. Consumer Sentiment survey.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.