The U.S. dollar traded slightly higher versus most of its major peers Tuesday while the performance of the EUR/USD was mixed with the euro fluctuating sideways between 1.0660 and 1.0580. The pound sterling however, dropped back below 1.2430 and we will now wait for a renewed break either below 1.2340/1.23 or above 1.2515.
While the rise of the dollar may experience a slowdown in the near-term, the greenback should generally continue to benefit from mounting expectations for inflation and higher interest rates. The odds of a Federal Reserve rate hike in December have reached 100 percent and traders will be looking for further hints about the Fed's future monetary policy path when the FOMC minutes from the Fed's November meeting are released today at 19:00 UTC. We might see some volatile swings ahead of the Fed minutes but giving the upcoming Thanksgiving holiday in the U.S. on Thursday traders should not expect huge market moves.
Apart from the minutes U.S. Durable Goods Orders are scheduled for release at 13:30 UTC, a report which could have a positive impact on the USD. U.S. New Home Sales due at 15:00 UTC may be of minor importance.
Let's have a look at the technical picture:
EUR/USD
Recently the euro traded sideways between 1.0660 and 1.0580 accompanied by a slight upward tilt. Based on this formation we expect potential gains to be limited until 1.0665 while dollar bulls will need to break the 1.0580-support significantly in order to breathe new life into the dollar rally. If dollar bulls succeed, the euro could tumble towards 1.0520 and 1.0470. A break above 1.0670 however, could drive the euro higher towards 1.0715 and 1.0750.
German and Eurozone PMI figures are due for release at 8:30 and 9:00 UTC but these reports will take a backseat to U.S. data.
GBP/USD
The British pound found itself between 1.2515 and 1.2380 and as long as it trades above 1.2340 the recent upward channel remains intact. Those who attempt to buy sterling should rather wait for an upside break above 1.2515, whereas a break below 1.23 would shift the bias in favor of the bears.
The U.K. Autumn Budget Statement is scheduled for release at 12:30 UTC and could have a significant impact on the pound, provided that anything new on the outlook will be revealed.
Here are our daily signal alerts:
EUR/USD
Long at 1.0675 SL 25 TP 20, 35
Short at 1.0615 SL 25 TP 20, 40
GBP/USD
Long at 1.2470 SL 25 TP 20, 40
Short at 1.2380 SL 25 TP 17, 35
We wish you good trades and many pips!
Disclaimer: Any and all liability of the author is excluded.