Generally, there is a broad based USD decline in the market, whether that can be attributed to President Trump’s feuds with some republican members or resumption of war rhetoric investors are risk averse. US treasuries and the USDX slide continued yesterday after the dollar temporarily breached 94 but has since retraced to 93.
In the meantime, Trump’s blatant attacks on republican members could trigger dissent which can lead to his flagship tax plan being booted out of Senate. Remember, Republicans enjoy only but a slim majority-52-48 in congress and after last week’s effortless passing of 2018 spending plan, Trump and other republicans should unite, amend contentious sections and then pass it by the end of the year. All that will depend on if they unite and pass it through a simple majority.
Technically, price action is testing resistance trend line and has since rebounded off the upper BB when last week’s candlestick closed. With bull momentum waning-notice %k and %d moving closer, I expect a strong reversal back to 110 especially if this week’s candlestick turns out bearish, closes below that 200 period MA and confirms a morning star pattern. Morning star patterns are strong 3-bar reversal patterns which in this case can be confirmed if there is a bear candle.
Because we have Fed minute meetings set to be released later in the NY session, I will be listening to speeches by Fed officials lead by Kaplan and Charles before they are released.
So, I will take a wait-and-see approach on this pair this week. How it closes and it’s relation to the resistance trend line will be important.
Have a good trading day.