Dollar rebound after ECB meeting

September 9, 2016

We have seen a big drop in the dollar during the beginning of this week, after ISM Non-Manufacturing figures sank to 6-year low, sending a clear message to the market that a rate hike in the near future is very unlikely, especially after the recent disappointment in the U.S jobs report last Friday.

Immediately after these figures, September rate hike probability fell to 26.0% 30.8% in November while the chances for a move in December remain at 54.0%.

As of today, the U.S Dollar managed to bounce in the beginning of the U.S trading session on profit taking as September FED meeting looms.

Looking at the major economic releases which came out today, the ECB rate decision was a disappointment for investors today as the central bank decided to keep all the three-benchmark rates unchanged and to keep asset purchase program at 80 billion euros a month. In the meantime, the bank reaffirmed that it is planning to run QE until March 2017 or beyond if needed.

The Euro rose to as high as 1.1327 before to retreat below 1.1300 handle as the bullish momentum faded.

In the U.S, initial jobless claims dropped to 259K down from 263K previously while the continuing claims came out below estimates at 2144K.

Technically, the dollar remain bearish in the daily chart, while in the near-term, the outlook is flat. The Greenback keep trading sideways between 96.25 level in the upside and 94.00 support in the downside, which keeps the short-term view unclear. Therefore, traders should focus on this zone, as a break outside of it will trigger a big move in the dollar during the following days.

Looking at the levels of interest in the hourly chart, 94.40 is seen as the short-term support, in the opposite, 95.00/20 is considered as a strong resistance zone.

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