The U.S. dollar advanced to new highs against the euro and British pound. The greenback resumed its uptrend in expectation the Fed will hike next month while other central banks are biased to ease. The euro weakened toward a fresh low of 1.06 after European Central Bank President Mario Draghi encouraged speculation the ECB will increase stimulus next week. Draghi said Friday the central bank will do what it must to raise inflation “as quickly as possible”. The euro could thus be vulnerable to further losses ahead of the ECB’s next policy decision on December 3.
Nonetheless, traders should be cautious with short positions as central bank actions are mostly priced in. The downtrend in the EUR/USD may come to a temporary halt at 1.0585, 1.0560 or 1.0520.
This week is a shortened holiday-trading week as U.S. markets will remain closed for Thanksgiving holiday on Thursday and Friday. Important economic reports are scheduled for release on Tuesday and Wednesday with U.S. Gross Domestic Product, Personal Consumption, Consumer Confidence and Durable Goods Orders.
Important eurozone reports are due for release today with the Eurozone’s PMI reports and Tuesday with the German IFO Business Climate.
Sterling traders should watch the U.K. GDP figures, scheduled for release on Friday. While GBP may find a short-term support at 1.5150, key support levels could only be at 1.51 and 1.5030. Resistances are seen at 1.52 and 1.5240.
This week starts off with important data releases such as German Services and Manufacturing PMI reports at 8:30 GMT, Eurozone’s PMI reports at 9:00 GMT and U.S. Existing Home Sales at 15:00 GMT.
We wish you a good start to the new week!
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