The U.S. dollar ended yesterday’s trading day slightly higher against the euro and British pound while Federal Reserve Chair Jerome Powell repeated the central bank’s dovish stance that a decision to taper stimulus is still a ways off. Many market participants expect the Fed to start tapering in December or January. Powell said that policymakers will talk about the possibility of scaling back stimulus at their next gathering on July 27-28.
Market momentum has faded amid the summer doldrums, making it difficult for traders to profit from small fluctuations within narrow price ranges. We continue to recommend a low-risk approach when trading in low volatile markets or staying on the sidelines.
EUR/USD: We expect the pair to remain within a trading range between 1.1880 and 1.1750. Breaking below 1.1740 could see accelerated bearish momentum towards 1.17. Euro bulls on the other side, should pay attention to a break above 1.19 with a higher target at 1.20.
GBP/USD: The cable traded sideways between 1.39 and 1.38. Above 1.3910 we see a next hurdle at 1.3940 followed by 1.3990. Below 1.3770 we will favor the downtrend with a lower target at 1.3650.
Traders will watch the U.S. retail sales report scheduled for release today at 12:30 UTC that could have an impact on dollar crosses.
Have a good weekend.
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