The Dollar Bounced Back Ahead Of Major Economic Reports And Trump Speech

Summary:

  1. The dollar reversed losses against a basket of six major rivals on the day after it found supports around monthly EMA60. However, whether or not it could turn around successfully is still to be seen. Keep an eye on U.S. ADP employment report and revised figure for Q2 GDP due to release tonight.
  2. S. President Donald Trump will deliver tax reform speech tonight and investors will look for clues of any real policies going forward. Whether or not he could revive market confidence as the world’s largest economy threatened by big natural disaster will be important to observe.

The dollar rallied and even recouped all losses from early session in London and New York session as dollar bulls fought back on Tuesday (29 August) after the extension of declines in yesterday Asian and London session created a new low for the year. The buck found some supports around monthly EMA60. However, it may only a technical corrective rally ahead of upcoming major reports like U.S. August ADP employment data, revised annual figure for Q2 GDP (QoQ), Trump speech regarding to tax reform as well.

The found supports around monthly EMA60 as short-term bears seemed to liquate positions after creating a temporary yearly low at 91.525. It could recover and move back to trading range of the month of August, depending on macro reports and risk events.

DXY Monthly Chart

As to non-U.S. currencies, the euro pulled back in relatively sharp manner after reacting off a high of 1.20693 hit in early London morning. However, the single currency’s short term decline stalled at H1-period EMA60 support and traded in a narrow range ahead of U.S. major economic data on the day. The sterling briefly broke above H4-period EMA169 resistance level which it however failed to hold in New York session. It will be interesting to see whether or not the British currency could be trapped in choppy markets, with a short-term support at 1.29. The dollar decisively rallied in a choppy market after found supports at H4-period EMA30. The commodity currency turned higher again early this morning, targeting highs from July on the daily chart, although it fell back slightly in yesterday New York session.

AUD/USD Daily Chart

AUD/USD Daily Chart

As far as precious metals concerned, gold slipped back after reacting off highs. It seemed the main reason behind the pull-back was the eased risk aversion sentiment. However, the actual cause was short term speculators chose to book profits and preferred to wait and see ahead of top-tier economic data and Trump’s speech. On its 1 hour chart, the yellow metal fell back to the 38.2% Fibonacci level of the prior up move, which confluence with H1-period EMA60 immediate support. It is highly possible we could see consolidation mode in the metal before the opening of New York session as its short term moving averages moved into its long term moving averages for now.

Gold H1 Chart

Gold H1 Chart

Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.

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