Forex News: US Dollar Shows Recovery Signs. Key Support Tested
Forex News: The first part of yesterday’s trading session was controlled by the bears and the FOMC Minutes added some strength to the US Dollar, revealing that some Fed officials were concerned about low inflation expectations but the majority still expect inflation to rise to 2%.
The long awaited retracement finally occurred yesterday and now the pair is testing the level at 1.2000. Both oscillators are showing good downside momentum so we expect price to break the current level and to move closer to the 50 period Exponential Moving Average. The bias is still bullish and the current move is just a needed retracement but if price moves below the 50 EMA, the uptrend started at 1.1735 might be coming to an end.
AT 1:15 pm GMT we take a first look at U.S. employment with the release of the ADP Non-Farm Employment Change, which is a report that tracks changes in the number of employed individuals, excluding the farming sector and government. It has a lower impact than the Non-Farm Payrolls released tomorrow, but under normal circumstances, higher numbers strengthen the US Dollar. Today’s anticipated reading is 191K, very close to the previous 190K.
The US Dollar made a comeback early during yesterday’s trading session and dragged the pair into 1.3500 support. The FOMC minutes had a relatively low impact but gave the greenback an extra push.
After failing to break 1.3600 resistance the pair retraced lower more than 100 pips, fuelled partly by a worse than anticipated British Construction PMI and partly by the FOMC Meeting Minutes. If the support at 1.3500 will be broken today, we will most likely see an encounter with the 50 period Exponential Moving Average and possibly with 1.3450. Our bias is bearish for the short term as long as price is trading below 1.3550.
The Services PMI is the last in this week’s British PMI series but its impact is usually the lowest out of the three. The release is scheduled at 9:30 am GMT and the expected reading is 58.1; higher numbers show optimism among purchasing managers from the Services sector and this usually strengthens the Pound but to a limited extent.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 8-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.