Weekly FX Market Wrap: USD Index & Major Currency Pairs

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USD Index Failed At 103.50

The US Dollar Index seems to be closing the week lower, which would be the fifth week of consecutive declines, one we have not seen since Q1 of 2015. However, the key point is whether the index will be able to close the week above the 100 barrier. If so, the bullish outlook is here to stay. Otherwise, another leg lower would be more likely during the week ahead.

Despite the decent economic releases throughout the week, the US Dollar kept on declining gradually. This is mainly due to the remarks of Mr. President Donald Trump, who said “our currency is too strong and its killing us” such comment was enough to see such decline this week. In addition, his plan to bring back the companies to the US, to produce the products in the US would need a weaker USD. However, we need to wait and see what the Fed’s input in the coming weeks.

Levels To Watch

S3

S2 S1 Pivot R1 R2 R3
98.55 99.39 100.04 100.88 101.53 102.37

103.02

EURUSD

The Euro Remained strong throughout the week above 1.06. One of the reasons of the Euro strength comes on the back of the latest ECB decision, who kept the message clear that the QE program is coming to an end, the tapering process will probably start in April on this year. In the meantime, the Euro has been rising for the past four weeks.

The technical indicators are slightly overbought, but there is still some room for further gains ahead. However, 1.08 seems to be a strong resistance, which should be watched carefully over the coming days, as a failure to break above that resistance would clear the way for another leg lower.

Levels To Watch

S3

S2 S1 Pivot R1 R2 R3
1.0467 1.0522 1.0612 1.0667 1.0757 1.0812

1.0902

GBPUSD

The British Pound seems to be closing the week higher, which would be its second week of gains. The British Pound strength comes on the back of two factors. 1) USD weakness 2) Brexit negotiations will probably take a long time, since the parliament is involved, after the supreme court decision earlier this week.

Meanwhile, 1.20 seems to be a very solid support. GBPUSD seems to be forming a double bottom on the daily chart, which should be watched carefully as well. On the upside view, GBPUSD has a solid resistance around 1.2780, which represents December resistance. The chances for a break above that resistance is weak so far, but its also possible, especially if the parliament votes against Article 50 legislation next week.

Levels To Watch

S3

S2 S1 Pivot R1 R2 R3
1.1661 1.1820 1.2098 1.2257 1.2535 1.2694

1.2972

USDJPY

The Japanese Yen weakened at the end of the week, trading were choppy following the US Dollar weakness. However, the Japanese Yen has been choppy for the past two weeks, declining all the way back to 112.50’s before rebounding today all the way above 115.0.

For the time being, the technical indicators are oversold and crossed over to the upside, which increase the chances for another rally ahead. However, a catalyst is still needed, which might come in from the BoJ decision earlier next week. The estimates are pointing for no change in the current policy, but what matters the most is whether the bank will hint for further QE ahead, given the fact that core inflation has slowed down significantly over the past few months. If so, the USDJPY would probably stay well above this week’s lows, with a possibility to add more gains above 116.0 later next week.

Levels To Watch

S3 S2 S1 Pivot R1 R2 R3
109.81 111.18 112.90 114.27 115.99 117.36 119.08

 

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