U.S. Dollar Continues Slide After Trump State Of The Union Speech
Dear Traders,
Turn-around Tuesday lived up to its name and we got what we were looking for: A reversal of the dollar’s short-lived recovery and a very good daily and monthly profit. The U.S. dollar is being sucked into the maelstrom triggered by the ‘America First’ agenda of the Trump administration. As for the depreciation of the greenback and the long-term outlook, we can point out that the protectionism move will negatively influence the world’s largest economy.
The dollar extended its slide after U.S. President Trump’s State of the Union speech. As expected, Trump sought to strike a positive tone and described a “New American Moment” of wealth and opportunity. Trump called on Congress to pass a 1.5 trillion infrastructure-spending plan but this campaign promise was widely expected by the markets. Thus, the dollar’s reaction to his speech was muted.
EUR/USD
The euro recovered some of its losses after the 1.2330-support proved intact. Now that the single currency has stabilized above 1.24 we could see another test of 1.2450, a short-term resistance in the EUR/USD. If the euro finds its way above 1.2460 we expect further gains towards 1.25 and possibly even 1.2650.
The British pound started a relief rally after the psychological support at 1.40 has been tested. If the pound climbs above 1.4210 we may see a rise towards 1.43 but this depends on the risk appetite and demand for dollars ahead of the FOMC decision.
The next upcoming risk event will be the FOMC rate decision at 19:00 UTC but no changes are expected. It will be Janet Yellen’s last FOMC meeting before her term ends in February.
Before coming to the FOMC decision, we will keep an eye on the Eurozone Consumer Price report, due at 10:00 UTC, followed by the ADP report at 13:15 UTC.
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