The U.S. dollar held its recent dip after a weaker than expected U.S. inflation report. While inflation has become a major theme in financial markets, price pressures are set to firm in the months ahead as President Joe Biden pushes for major stimulus and consumer spending is expected to accelerate as more are vaccinated.
Yesterday’s best performer was the British pound which rose towards 1.3870 despite the overbought situation in the GBP/USD. While we still believe that a correction is overdue, traders should follow the trend and mark the 1.39-level as a next higher target. Falling back below 1.3820, the cable could head for a test of 1.38. A lower important support area is currently seen at 1.3760-50.
The EUR/USD was steady around 1.2130 while bullish momentum was not enough to push the pair higher than 1.2144. Chances could be in favor of upcoming bearish momentum now unless the euro breaks above 1.2180. For bearish momentum to accelerate we will watch out for a break below 1.2040.
DAX: Bearish momentum accelerated after the index was not able to climb back above 14040. Short traders were able to book a good profit yesterday. For the upward trend to gain traction again we would now need to see a renewed break above 14100 and further 14200 but as long as the DAX remains above 13300 the overall uptrend should remain intact.
We wish you good trades!
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