General market theme
The US Dollar made a comeback yesterday when the US Consumer Confidence levels printed much better than expect along with the current month’s Services PMI reading which helped build up the case for a well-progressing US economy. We’d seen a weakness in the Dollar recently but investors got a breath of fresh air yesterday and it now depends on the way the Fed comments on these new figures. We believe that the Dollar is not out of the woods yet and much will be decided next week when the Non-Farm Payrolls report will be made public.
Price action highlights
The Euro reversed to the downside yesterday and made its way to the 1.1200 area from when it bounced for the time being. A penetration below this level though could accelerate losses towards the 1.1100 area especially if the Dollar receives further support from the several Fed officials speaking in public the following days. At any case, last week’s rally for the Euro seems to have ended now and the question becomes whether we will see a tight consolidation or a return to the 1.1100 base of support.
The Cable held up pretty well against the advancing Dollar and after reaching the 1.3000 area seems to try to build a base of support around that level. The US reports didn’t prevent the UK currency to hike higher which is a sign of robustness from the Pound which is still in trouble though while the Brexit-related concerns are still part of the public chatter. To the upside the 200-period moving average is the first resistance and if the Pound wants to move towards the 1.3100 area it needs to overcome this obstacle first.
Focus of the day
The US Durable Goods is the only piece of important data pending for release today, however there’s a host of officials speaking in public today and their comments will take a toll on the majors’ price action. Fed Chairwoman Yellen is testifying before a House panel, Mario Draghi is speaking in London and later in the day several Fed Presidents will also be sharing their views in public so we need to remain alert and note down their comments and any hints they wish to make about future action.