U.S. Dollar Pauses Rally, For Now
Welcome to a new trading week.
What will be in focus this week? We have some Federal Reserve speak in the days ahead as well as the U.S. retail sales report on Tuesday. Retail Sales are poised to show an acceleration in October which could trigger a bullish reaction in the U.S. dollar.
EUR/USD – Further downward pressure?
The euro’s underperformance is set to continue as long as the European Central Bank lags behind the Fed in tapering asset purchases and hiking interest rates. An ECB rate hike next year is according to ECB President Christine Lagarde “very unlikely”, which is why the euro’s performance will depend on the dollar’s strength in the near-term. We continue to look at a potential trading range between 1.14 and 1.1540.
GBP/USD – Consolidation ahead?
After the cable has stopped its fall just two pips above 1.3350, we saw a small rebound with sterling trading back above 1.34. Currently we see short-term chances in favor of the bulls with a lower resistance coming in at 1.3480. In the case of a rise above 1.3510 we see a higher target at 1.3570 but we do not expect big movements in the days ahead. Consolidated moves between 1.35 and 1.33 are much more likely.
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