There has been a strong bearish rally in the U.S dollar index after it breached the critical support level at 91.90.The U.S dollar index which measures the overall value of the green bucks strength faced extensive bearish pressure after the Unemployment Claims data came missed the expectation. Despite the two rate hike by the FED officials, the green bucks are still struggling hard in the global economy. Some of the leading investors are thinking that the third projected rate hike by the FED officials will not be implemented due to the ongoing economic crisis. However, the new U.S administration is totally unpredictable and the dollar might gain extensive strength in the global market if Mr. Trump comes up with a new policy to settle the pending tax cut policy.
Upcoming high impact news
Though the green bucks are suffering from extreme level of uncertainty the optimistic dollar bulls are still expecting a stronger dollar by the end of this year. On Thursday we have U.S Unemployment Claims data release and a strong positive news will mitigate the current bearish threat to a great extent. If the data comes less than 303k then the FED will also have a chance to think about their third rate hike program prior the closing of the year. On the contrary, the U.S central bank is also trying hard to reduce their balance sheet so that they can bring stability to their economy. On Friday we have Core Retail Sales m/m data release and if it exceeds the expected 0.5% expected gains then we will see a stronger dollar in the upcoming future. However, all the investors are currency eyeing on the unemployment claims data since this factor is often considered to be the best leading indicators to gauge the performance of the U.S economy.
Currency market overview
Most of the major pairs traded significantly higher prior to the closing of the last trading week due to a drastic increase in the Unemployment Claims. However, the dollar has bulls managed to gain some of its bullish strength prior to the starting of this new trading week. The Aussie dollar dropped sharply after it hit the critical resistance level at 0.80656.Though we had a massive false breakout in the AUD/USD pair most of the investors in the CFD trading industry are still not sure whether it’s a false breakout of tempting the aggressive dollar bulls. The EUR/USD pair traded relatively higher against the mighty U.S dollar since the EURO bulls are pumped up by ECB president Mario Draghi’s speech. On the contrary, the U.S dollar traded significantly higher against the low yielding Japanese Yen and traded at 110.09 (6: PM, GMT + 6).To be precise the dollar traded mixed in the global market due to the extreme level of uncertainty regarding the third projected rate hike.
Fundamental the U.S dollar is significantly week against in the global economy and there is no strong sign of recovery. Considering the technical factors the U.S dollar index has already breached a critical support level on the daily chart but some of the investors are considering this breakout as a false breakout. The upcoming Unemployment Claims data release is going to give us a clear clue regarding the green buck’s next movement. The dollar will erase most of its loss with a significant positive data release. On the contrary, a negative data release will confirm the establishment of medium bearish trend formed in the U.S dollar index. Meanwhile, the price of the precious yellow matter (gold) is trading significantly higher breaking the recent bearish trend line resistance. Considering the overall parameters it’s better to stay on the sideline until the market gives a clear clue regarding the green buck’s strength.