Published On: Thu, Jan 11th, 2018

The Dollar Index Awaits Short-term Directional Cues After A Wild Trading

Summary:

  1. The rally halted as U.S. treasuries yield soared on Wednesday. However, the expected Trump’s infrastructure plan supported the in late New York session.
  2. We will have some major macro events today, including ECB monetary policy meeting minutes for December at 2030 BJT and U.S. December PPI at 2130 BJT.

The dollar rally derailed as U.S. treasuries yield soared on rumors that some Asian central banks may consider reducing or halting their purchase of U.S. government debt. However, the expected Trump’s infrastructure plan supported the dollar and U.S. industrials in late New York session. We will have some major macro events today, including ECB monetary policy meeting minutes for December at 2030 BJT and U.S. December PPI at 2130 BJT.

Technical

The (DXY) declined then jumped in the form of V-shape on the day. It is awaiting dictations from both ECB minutes and U.S. PPI tonight. We should tread cautious the traded wild, with upside resistance at 92.33 and downside support to watch at 91.62.

DXY H4 Chart

DXY H4 Chart

As to non-U.S. currencies, the euro shaped a wide-range on Wednesday. It is advised to wait and see until we see clear indications of the movement in the term. The British pound was pressured further below H4-period EMA60 for now in a choppy and whether or not the on-going decline on the 4 hour chart could form a downtrend remains to be seen. The dollar staged a bullish breakout above its monthly highs after the commodity currency closed higher slightly on Wednesday. We are now on lookout for a potential extension of the consolidation around highs.

GBPUSD H4 Chart

GBPUSD H4 Chart

Switching gears to precious metals now, the gold rallied and broke above its H1-period EMA60 and then retested the level. Whether or not the yellow metal could resume its uptrend after short-term whipsawing will be hinged on the results of the U.S. PPI tonight. A continued rising in PPI could help the dollar rebound as the positive inflation data could have an impact on CPI Friday and in turn boost the expectations of the future rate hikes by Fed. Therefore, a positive PPI report could be bad to the gold’s uptrend.

Gold H1 Chart

Gold H1 Chart

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