U.S. Dollar IndexShort
DXY | Retracement after Rejection - 10:11:40 (UTC) Tue Dec 21
The dollar index fell a little overnight because some people took profits from Friday's huge rise in the value of the US dollar as new wires stayed quiet. In quiet Asian trading, the dollar index fell 0.17 percent to 96.50.It dropped to 96.46. I think the chop-fest will keep going, with a move through either 96.00 or 97.00 indicating where the US dollar will go next. This morning, EUR/USD made a small technical recovery this morning, rising to 1.1285 this morning. This week, the range of 1.1200 to 1.1350 is likely to keep the pair in check. Because of the virus and political turmoil, GBP/USD has continued to fall to 1.3215 today. It will be possible to test 1.3000 if 1.3150 doesn't work. With US yields not moving at all overnight, the USD/JPY rate is still stuck at 113.70. So, it's important to note that even though the US dollar fell in other places overnight, the three risk-sentiment "amigos" didn't rise at all and remain near year-lows. That means that the markets are still at risk from more virus stories and that the dips in the US dollar may be short-lived. Asian currencies have had another mixed show. The yuan is still getting stronger, even though the PBOC is giving it less help. The Indian rupee, for example, was able to get some help from the weak US dollar. The strong Chinese yuan and less liquidity during the holidays are reducing activity in the Asian FX market. I expect range trading to be the main trading mode for the rest of the week.
People who are looking ahead say that this week's US events could have a big effect on the dollar. Some old news from Q3 GDP and PCE prices was out on Wednesday. Then there are more important US Personal Income and Spending and Durable Goods for November, as well as the weekly Jobless Claims on Thursday, which are all important to know. Another set of minor inflation data from throughout the globe has been published, which will likely be of relevance only if it reveals huge declines that aren't due to baseline effects, which is unlikely to be the case. Other than that, news about US politics and the Zika virus will continue to dominate the proceedings.
People who are looking ahead say that this week's US events could have a big effect on the dollar. Some old news from Q3 GDP and PCE prices was out on Wednesday. Then there are more important US Personal Income and Spending and Durable Goods for November, as well as the weekly Jobless Claims on Thursday, which are all important to know. Another set of minor inflation data from throughout the globe has been published, which will likely be of relevance only if it reveals huge declines that aren't due to baseline effects, which is unlikely to be the case. Other than that, news about US politics and the Zika virus will continue to dominate the proceedings.
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