Summary:
- The dollar found supports and rebounded again thanks to the strong expectations of rate hike by FOMC and the prospect of the final version of the tax bill in the U.S. this week.
- We will get major macro data including November CPI and RPC from UK and November PPI from U.S. today.
The dollar found supports and rebounded again against a basket of six majors in late New York session after the short-term corrective decline done, mainly thanks to the strong expectations of rate hike by FOMC and the prospect of the final version of the tax bill in the U.S. this week. Whether or not the greenback could sustain its rally to create a new high since last Friday going forward will be important to observe. The important data to watch today will be November CPI and RPC from UK and November PPI from U.S.
Technical
The dollar index (DXY) bounced back again above its H1-period trend supports. Its short term moving averages found hard to cross below its long term moving averages which turned higher after flattening though they moved into the latter on the 1 hour chart. Given that the index is expected to stage potentially more up moves, it will be interesting to watch whether or not it could break above last Friday’s highs.
As to non-U.S. currencies, the euro turned lower again after reacting off its resistance at circa H4-period EMA50. Look for testing lows of last Friday with modestly strong downside momentum in the short term. The British pound declined further to retested its daily trend support, with the next potentially strong support at the circa 1.3293-1.3276 region. The Aussie dollar rally materialized while held below its H4-period EMA30. Whether or not the commodity currency could retest the resistance in the short term will be interesting to watch.
Let’s take a look at precious metals now. The gold had moved back into the prior trading range since late New York session after declining off the upper limit of the aforementioned range and even broke down its lower limit. Its short term moving averages tended to converge after turning lower again below its long term moving averages which remained bearish and divergent comfortably on the 1 hour chart. Look for a corrective rally in the short term on the 4 hour chart.
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.