Dollar Rally: Next Price Levels To Watch Out For
It seems that everyone is jumping into buying U.S. dollars before year-end as this trade appears to be relatively risk-free at the moment. Amidst a strong market environment the dollar rallied to its strongest level since 2003 against the euro while the British pound dropped below 1.24 after the Bank of England’s monetary policy statement flagged global risks. As expected, BoE policymakers kept monetary policy unchanged, indicating that the outlook for the global economy has darkened amid renewed strains from rising interest rates and a strong dollar.
The U.S. dollar is on the rise, so which are the next important price levels to pay attention to?
The euro broke below its crucial support at 1.0470. Given the strong downtrend we should generally expect further losses towards 1.01 and possibly also a drop towards parity but this move may not happen this year. In view of the fact the price developments are never straight-lined, we must also prepare for potential pullbacks. With this in mind, we see a next resistance at around 1.05 – the former support area in the euro. Above 1.0570 however, prices may consolidate towards 1.0670.
The pound sterling faces a next support zone ranging from 1.2350 to 1.23. In case of a break below 1.2270 the pound may tumble towards lower targets at 1.2150 and 1.21. If the cable, however, is able to hold above that support area we may see a renewed test of 1.2520 and 1.2660.
There are no major economic reports scheduled for release today. Eurozone Consumer Prices due at 10:00 UTC should be of secondary importance as no changes are expected. From the U.S. we only have Housing Starts scheduled for release at 13:30 UTC but this report is unlikely to affect the USD.
We hope that you were able to take some profits this week and wish you a relaxing pre-Christmas weekend.
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