Summary:
- The dollar index nosedived early this morning amid uncertainties over tax reform in U.S. It will be interesting to watch whether or not the dollar could create a new low on the week.
- Major central bankers including Draghi and Weidmann from ECB, Claine at Deutsche Bank (DE:DBKGn) will speak at ECOFIN today.
Wall Street climbed as the three major indices all closed higher after the U.S. House voted 227 to 205 to pass the House Republicans’ tax reform legislation Thursday 16 November. However, the bill only cleared the least hurdle from the House as more resistances will come from the Senate. The dollar gapped slightly lower against a six basket of major rivals at opening early this morning and staged a swift decline, indicating concerns over some controversial articles in the Senate version. The dollar could continue to come under pressure in the short term as the market participants could remain haunted by uncertainties in the tax reform.
Technical
The dollar index (DXY) traded in a narrow range on Thursday. However, it nosedived and came close to weekly lows on Friday. It could potentially target downside supports at circa 93.0 follow by 92.5 if the strong down move momentum continue and create a new low on the week.
As to non-U.S. currencies, the euro rebounded again after trading choppily, targeting short-term resistance at highs printed on 12 October. The British pound accelerated its up move early this morning on the course of rising for the third consecutive days, potentially hitting the upper limit of the daily trading range. The Aussie dollar bounced back slightly to H1-period EMA60 in the choppy Asian trading at the lower end of the trading range, with significantly lesser extent in the upside momentum and magnitude than the commodity currency’s European rivals.
Take a look at precious metals now. The gold has potential to strengthen again amid the short-term weakness in the dollar although the yellow metal still traded in a choppy mode, targeting upside resistance at around 1288.3-1289.3. It could set the tone for the upcoming week if the price could close higher both on daily and weekly chart during the last trading day for the month of November.
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.