This article was written by Ashwin Peswani, Regional Director of .
The first day of the week was no different for US dollar traders even if Hillary Clinton got a lead over Donald Trump in the first round of US presidential election debate as market players perceived that both prospects favoring weaker US currency.
Additionally, a dip in new home sales with the largest decline in nearly a month, to 609,000 from 659,000, weakened the greenback further, dragging it into the negative when the day closed.
Further, the EUR gained with German IFO Business Confidence running to its highest in more than two years, while GBP couldn’t stop its downward run as the ECB president said that the UK won’t be given special treatment if it wants to apply for single market access after cessation proceedings start.
Moving on, the JPY managed to extend its advances as the IMF praised recent monetary policy. The AUD and NZD moved up in search of higher interest rate-bearing currencies. The CAD couldn’t gain due to crude declines ahead of the Algerian meeting which is still uncertain with Iran posing a threat to the discussion.
During early-day trading on Tuesday, the JPY weakened a bit even after Japanese PM boasted of new BoJ measures. The USD remained on the negative side as investors perceive higher risk of the Fed not being able to announce a rate-hike in December. The AUD and NZD registered noticeable gains and the CAD also moved up after crude prices witnessed another positive start.
Meanwhile, US CB Consumer Confidence and Flash Services PMI are likely headlines for the day as these figures could portray the strength of US economy. Both these details indicate mixed releases as Services PMI might inch a bit up to 51.1 from 51.0 prior while the Consumer Confidence gauge pares its previous gains to 101.1 from 98.6.
Given that the Services PMI again disappointed greenback traders, the chances of EUR/USD challenging the 1.1285-90 TL resistance can’t be denied. If broken this could propel the pair to 1.1330 but a bullish print could drag the pair back to the 1.1200 mark and then to the 1.1180 support level.
Going forward, GBP/USD is less likely to hold its present pullback and might revisit the 1.2900 mark, with breaking 1.2830 being the next possibility. A break of 1.2900 can print 1.3050 on the chart. USD/JPY is in the 100 – 101.10 range while AUD/USD and NZD/USD are likely rallying north with 0.7730 and 0.7365 acting as upcoming levels and 0.7630 and 0.7250 as immediate support to observe.
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