We welcome you to the last trading days before our summer holiday break. While Friday’s strong payrolls report spurred many investors to hope for a Federal Reserve rate increase by the end of this year, the gains in the U.S. dollar were limited due to the lack of momentum during the traditional quiet summer month of August. As a result of these weak market conditions and low volumes, traders must be satisfied with smaller profits.
The greenback advanced against its major peers on the back of greater U.S. jobs growth, but it seemed as if the euro and British pound were looking for a support, rather than paving the way for further dollar gains. The euro tested the 1.1050-level which proved to withstand the downward pressure for the time being. Given that crucial support level short-traders should better wait for prices below 1.1040 in order to sell the euro towards 1.0970 and 1.09. The British pound rebounded after testing the 1.3020-level, which led support to the pound. As long as sterling remains above 1.30 there is no reason to focus on lower price targets. With no market moving data on the calendar until the final day of the week we expect the price action in both major currency pairs to be limited to narrow trading ranges.
It might be a quiet week as the only interesting pieces of economic data will be released on Friday with the German and Eurozone GDP reports, followed by U.S. Retail Sales and Michigan Confidence.
We wish you a good start to the new week and recommend trading by a low-risk management as the current market conditions are less profitable.
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