The US Dollar struggled for grip during yesterday’s trading session when the PCE Price index MoM came out lower than expected, adding more confirmation to a slowdown in inflation. The greenback shrunk big times against its peers including the Pound, Euro, Yen, and also gold. Equities retraced slightly after receiving a huge boost from Powell’s speech. US Crude was up 1.13% yesterday.
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Source: Alchemy Markets Trading Central
Event-driven momentum pushed the fiber towards the upside and the pair is now trading steadily higher above its 200-day SMA and approaching the next area of resistance near 1.0610.
A similar pattern can be observed in other major pairs
GBPUSD has seen a very bullish day due to a weaker dollar. The rally also put the pair at a critical junction as it is now testing multiple technical areas including the 1.2290 key resistance, and the upper boundary of the rising channel and it has also just broken above the 200-day SMA. Should the momentum continues, we could see a sustained rally towards 1.2620 which is roughly 350 pips away from the current price.
One of the major beneficiaries of the dollar’s weakness has been the Yen with USDJPY losing more than 615 pips in 2 and a half trading days.
A quick update on our trade idea from our FX Midweek outlook, our short-term sell idea has played out well. However, we did not manage to get an opportunity to go long at our preferred level near 134.500 due to overwhelming bearish pressure.
USDJPY has breached significantly beneath that level and even the 200-day SMA couldn’t handle the extremely lopsided sentiment. Having said that, stay cautious if you are looking to buy the dip. The 131.000 whole level might be a potential zone to look out for.
Precious Metal > Gold
Apparently gold has had a successful breakout from its bearish trendline thanks to the dollar’s decline. A boost from inflation data yesterday propelled the metal further toward its significant area near $1800-1806.
Gold traders must exercise caution as well because trading near significant levels prior to key events such as the NFP is no good news due to extreme volatility. If NFP manages to bring the pair above $1806 and its 200-day SMA, we could be looking at the 50% Fib retracement level.
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