The Dollar Pauses But Is The Rally Really Over

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

The Dollar Pauses But Is The Rally Really Over?

Economic Strength Is Leading The Dollar Higher

The Dollar Index hit a new high in the last week but has since pulled back from that level. The high, near $97 and well above a target for long-term resistance, is the highest level the index has seen in more than 2.5 years and likely not the highest it will see in the coming weeks and months. The rally in the dollar has been driven by many things but is underpinned by one fact; the US economy is strong and the leading the global expansion.

This week’s data shows broad expansion within the US economy. Industrial gauges like the Philly Fed’s MBOS and the Empire State Manufacturing Survey show expansion within the manufacturing sector while housing market indicators come in above expectations. Employment data shows jobless claims continue to trend lower and are consistent with tightening conditions while Retail Sales were above expectations and show a strong consumer.

The Dollar Index may have pulled back this week but the move is more likely a consolidation within uptrend than indication of reversal. The Index has recently broken out of a major triangle pattern and is headed up to the $100 level.

The strength in the dollar is pushing the EUR/USD lower as well. The single currency fell to a long-term low versus the dollar over the past week and has broken out of a flat-bottomed triangle and below a key support. The pair has entered a near term consolidation but has failed to move above last week’s close so sideways to downward pressure is likely to prevail.

Gold prices also took a hit in this week’s action but may have reached bottom already. The spot price fell below the $1,180 level ad bounced higher to form a doji candle. The candle is indicative of support and is especially strong because it confirms my support line and is further confirmed by a bullish crossover in the stochastic. A move higher is not out of the question but is likely to find resistance at the $1,200 level if not lower.

Even Bitcoin is not immune to the strong dollar. The world’s leading digital commodity and reserve cryptocurrency has fallen to long-term lows near $6,000 in tandem with the dollar’s surge to near highs. The token has confirmed support at this level and begun to bounce higher although the extent of the upswing is questionable. Bitcoin is facing many positive catalysts in the coming weeks and months but the market has yet follow through on bullish outlook. A move up may find resistance near $6,750, the short-term moving average and a key downtrend line.

FOREX-Dollar rally pauses, but stays solid on U.S. economy, Fed outlook

* Dollar index comes off seven-week high hit in U.S. trade

* Longer-dated US bond yields drop from multi-year highs overnight

* Trump criticises Fed for going too fast in raising rates

* Sterling lifted by DJ report of Brexit deal by Monday

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Daniel Leussink

TOKYO, Oct 10 (Reuters) – The dollar slipped further from seven-week highs on Wednesday although underlying support for the greenback remained strong amid a confluence of factors, including a strong U.S. economy and a steady path for rate hikes by the Federal Reserve.

While U.S. Treasury yields came off their highs overnight, the propensity for further spikes remained intact as investors bet rising inflation pressures will keep the Fed firmly focused on tighter policy, even as U.S. President Donald Trump took aim at policy makers’ hawkish inclinations.

Sterling took some comfort on hopes Britain and the European Union might be close to a Brexit deal, while markets’ focus also was squarely on a slate of issues, including the intensifying Sino-U.S. trade dispute and Italy’s budget plans.

On Wednesday, the dollar index =USD was largely unchanged at 95.575, not far off 96.163 reached during the previous session – its highest level since Aug. 20.

“There seems to be a bit of exhaustion on the part of the foreign exchange market,” said Bart Wakabayashi, Tokyo branch manager at State Street Bank.

“We’re not seeing the extension of the dollar buying (against the euro and yen),” he said.

Sterling got a lift from a Dow Jones Newswires report the previous day that an agreement on the terms for Britain to leave the economic bloc may be reached as soon as Monday. Jones, citing unidentified diplomats, said Britain and the EU had narrowed their differences around the Irish border but some issues have not been resolved.

Sterling GBP=D4 gained 0.1 percent to a near two-week high of $1.3161, after tacking on 0.4 percent during the previous session.

The euro EUR= gained 0.17 percent to $1.1511.

The single currency slipped overnight to a seven-week low of $1.14325 after yields on Italy’s 10-year paper hit a 4-1/2 year high, despite comments from Italian Economy Minister Giovanni Tria. said that Italy will do whatever is necessary to restore calm if market turbulence turns into a financial crisis, adding fears over the country’s budget plan for next year were unjustified though his remarks failed to reassure investors. on the benchmark 10-year Treasury paper US10YT=RR stood at 3.21 percent on Wednesday, after hitting a seven-year top of 3.261 percent overnight.

“The rising U.S. bond yields have obviously provided support to the dollar,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo.

“On the short-term, the dollar may be sold, but I don’t think that will last long. The dollar will start to strengthen again.”

Some traders said comments on Tuesday by U.S. President Donald Trump helped cool Treasuries yields. to reporters late U.S. time on Tuesday, Trump said he doesn’t like what the Fed is doing because the U.S. has inflation “really checked”, and he doesn’t think “it’s necessary to go as fast” on raising rates. Fed last raised interest rates in September and left intact its plans to gradually tighten monetary policy.

Against the Japanese yen JPY= , the dollar edged higher, trading at 113.04 yen.

Dollar pauses after rally, traders wary over global trade tensions

SINGAPORE (April 2): The dollar held steady against the yen on Monday, taking a breather after last week’s rally and as it treads cautiously amid lingering concerns over a U.S.-China trade spat.

The dollar last traded at 106.30 yen, after having risen more than 1.5 percent last week for its biggest weekly gain since September 2020.

The U.S. currency had risen against the yen last week, helped by signs China and the United States were working behind the scenes to avoid a full-blown trade war, and hopes for a diplomatic breakthrough over North Korea’s nuclear programme.

The resulting uptick in risk appetite weighed on the safe-haven yen, a currency that tends to rise during times of market turmoil and vice versa.

Given the simmering U.S.-China trade tensions, however, some analysts say the dollar’s gains against the yen may be limited in the near term.

China has slapped extra tariffs of up to 25 percent on 128 U.S. products including frozen pork, as well as on wine and certain fruits and nuts, in response to U.S. duties on imports of aluminium and steel, China’s finance ministry said.

The tariffs, to take effect on Monday, matches a list of potential tariffs on up to $3 billion in U.S. goods published by China on March 23.

Markets haven’t shown much reaction to China’s announcement so far, partly because Beijing had already warned of such measures, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

“However, if Chinese equities were to fall on this factor, we could see a general risk-off move,” Okagawa said.

Analysts say another focus is the potential for foreign investment by Japanese institutional investors at the start of Japan’s new financial year.

Sumitomo Mitsui Banking Corporation’s Okagawa said Japanese investors will probably increase their allocation to overseas assets, at least to some extent, which will support the dollar.

“Still, it’s probably going too far to say that the dollar will head up towards 110 yen in April because of such fresh buying,” Okagawa added.

Against a basket of six major peers, the dollar last stood at 89.967, having backed off from a one-week high of 90.178 set last Thursday.

The euro held steady at $1.2321.

Although expectations of an exit from the ECB’s stimulus had boosted the euro since last year, the common currency has been in a holding pattern since hitting a three-year high of $1.2556 on Feb. 16, with its March 1 low of $1.21545 seen as an immediate support level. – Reuters

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

Like this post? Please share to your friends:
Binary Options Online Trading
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: