USD bulls blitz the market

16 December, 2016

Dollar bulls are looking to end Christmas on a high as they continue to dominate global trading pushing most major pairs to extremes. However it was not all on the back of the recent FED rate rise, but was led in part by some positive economic data as well, with Unemployment Claims coming in at 254K (255K exp). This in turn bolsters the recent comments from the FED yesterday which said that the labour market continued to show signs of strength despite many saying it was starting to lag a little. The Philly Fed Manufacturing Index was also much stronger than expected coming in at 21.5 (9.1 exp), and this will be back on the back of US Manufacturers who are expecting trump to help support their businesses and push back overseas exports. All in all it's looking very much like a strong ending for the USD bulls come the end of the year if economic data continues to show signs of strength and markets continue to believe in Trump and his promise to help bolster the US economy via spending.

While the USD was being bullish it was mostly a positive day for the European Union from a reporting perspective but the EURUSD struggled against the momentum today as it dropped below 1.05 and into the 1.04 regions. After crashing through a strong level of support at 1.0528 the market has continued to show signs of bearish behaviour and it's likely it will continue to do so until it finds the next major level of support at 1.0221. Any bullish movements higher on the EURUSD are likely to struggle with the 50 day moving average acting as dynamic resistance in the market, and also the former support level at 1.0528 now likely to act as resistance. If momentum continues we may see a case of parity with the Euro which would be an interesting scenario, and may worry US exporters in the long run.

The UK economy also find itself today in a positive situation with consumers continuing to be positive in the lead up to Christmas and Core Retail Sales m/m lifting to 0.5% (0.1% exp), this in turn has lead to Core Retail Sales y/y coming in strong at 6.6% (6.0% exp). However even with the recent boost and the fact that the BoE held interest rates the GBP has continued to struggle against the USD today on the back of the so called Trump effect and a strong US economy.

The GBPUSD managed to slip quickly down the charts before coming up short of support at 1.2358 and pulling slightly back. This pause was on the back of traders making some very large moves in a short time frame and looking to unwind. It's likely the next level down could be just as aggressive and support at 1.2164 is likely to be the next level which is targeted heavily, after this it's likely to struggle for any further momentum until we see Trump come to power. 


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