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There Is No Reasonable Explanation For The Dollar’s reversal

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Dear Traders,

It seemed as if dollar bulls just sought an excuse for taking profits on dollar positions after the U.S. dollar rose to new highs on evidence of firming inflation. Whereas for the U.S. all signs are pointing to higher inflation and thus, higher interest rates and a stronger dollar, there was no reasonable explanation for the sharp reversal of the USD towards the end of the trading day. During the House Financial Services Committee hearing, conservatives Republicans pressed Fed Chair Janet Yellen to concede that economic growth is still disappointing and that the Fed has failed to fix underlying problems. For the most part, Yellen’s tone was positive, defending the Fed’s efforts that had contributed to strong job growth. The only negative point during the hearing was that Yellen acknowledged that economic growth has been “quite disappointing”. This seemed to be the reason for the weakening dollar in short-term time frames.

The EUR/USD traded higher, heading towards 1.0630 and it will now be interesting whether the 1.0660-resistance is going to hold. If the euro breaks through 1.0665/70 we expect accelerated bullish momentum towards 1.0710 and possibly even 1.0750. A current support area is however seen at 1.0580-60. If the euro falls back below 1.0560 it could extend its losses towards 1.0510.

The pound sterling ended the trading day virtually unchanged against the greenback. A break above 1.2520 could boost bullish momentum but we bear in mind that the barrier at 1.2550 is still unbroken. Crucial support levels are seen at 1.2350 and 1.2310 and as long as the pound remains firmly above these zones we will rather focus on higher price levels.

There are no major economic reports scheduled for release today and those of you who have already made a good profit this week, shall better not reinvest their profits.

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GBP/USD: Still Room For Further Gains?

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Dear Traders,

We finally saw some corrections in both major currency pairs at the beginning of this holiday-shortened week as investors took profit on long dollar positions. While the euro rose only moderately to 1.0650, the British pound proved to be the best performer and surged to a high of 1.2513. While we believe that the upward movement in the EUR/USD may be limited until 1.0660/90, there could be some room for further gains in the GBP/USD. If the cable is able to break above the 1.2515-level, the focus shifts to the higher target at 1.2550. As stated in previous analysis, a sustained break above 1.2550 could reinvigorate fresh bullish momentum, driving the pair even higher towards 1.2770. Current supports are however seen at 1.2380 and 1.23.

Euro bears should however wait for a renewed break below 1.0570 in order to sell euro towards 1.05.

There are no major economic reports scheduled for release today. The U.S. Existing Home Sales report due at 15:00 UTC is not expected to have a significant impact on the dollar.

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts https://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service https://www.maimar.co/signals/

We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2016 Maimar-FX.

www.maimar.co