Like Britney Spears, we saw very little demand for the dollar in last week’s trading. It was very weird considering that a few Federal Reserve officials expressed their support for tapering. What the heck, right?
Some analysts say that the Greenback weakness could be attributed to the activity in the bond market. The currency usually shares a positive correlation with U.S. yields. But since the rise in yields have been limited since July, the dollar’s gains has also come to a stop.
I wonder if market sentiment would continue to dictate the currency’s price action this week or if it will take its cue from the roster of reports that we have on tap. Unlike last week, there are a few potential market-movers scheduled for release from the U.S. Retail Sales, PPI, CPI, Philly Fed manufacturing, University of Michigan consumer sentiment, and a few housing reports are lined up.
If you ask me, positive figures will likely be bullish for the dollar as they would help ease concerns that the U.S. would falter when the Fed tapers its asset purchases. This is just my two cents though, what do you think?
I’m looking to go long GBP/USD. However, I’m gonna wait for the pair to pull back to the 50% Fibonacci retracement and test the 200 SMA and a previous resistance area. If reversal candlesticks materialize and the fundamentals line up with my trade, I’ll probably go long.
I have the same view on EUR/USD, but I’m not going to jump in yet even though price is testing the 100 SMA. It is Monday, and entering now is premature. I’ll wait until price falls to the 1.3300 level and see how traders react first.