USD Supported By Confident Fed And Strong Data


The USD gained against some of its equivalents yesterday after the release of strong U.S. economic data and the November meeting of the Fed, which showed a fairly confident Fed. The minutes showed that a number of bank policymakers were open to the idea of ​​accelerating the tightening of the bank’s QE program, indicative of the climate at the meeting, which could result in a faster tightening of the bank’s QE program. Also, it should be noted that some of the financial data yesterday came out stronger than expected as the initial jobless claims fell below 200k, a low level not seen since 1969 making headlines, while consumption for October also accelerated more than expected and the University . of Michigan Consumer Sentiment for November improved compared to the preliminary edition. Other data provided mixed signals moderating the USD’s bullish trends. Today due to the lack of high-impact U.S. financial data, we expect the green dollar to be affected by fundamentals. Also please note that it is a Thanksgiving holiday in the US and Black Friday will follow, so some abnormal business conditions may occur.

The USD index continued to rise yesterday breaking the 96.65 (S1) resistance line, now turned to support. We remain bullish for the index as long as it stays above the upward trend line started since November 10th. Please note that the RSI indicator below our 4-hour chart is between the readings of 50 and 70, confirming the bullish sentiment is still on a declining slope, which could imply that the bulls may lose some steam. If the buy interest continued to be present for the green dollar, we may see the index targeting if not reaching the 97.30 (R1) resistance line. If sellers care about the direction of the index, we may see that it breaks the support line of 96.65 (S1) the aforementioned uptrend and will target if it does not reach the support level of 96.15 (S2).

Pandemic, ECB weighs on EUR

Despite some stabilization against the USD yesterday, the common currency slid lower against the USD and the GBP continued. Today we note the release of Germany’s Detailed GDP index for Q3 and Germany’s GfK consumer sentiment forecast for December. Money wise for EUR traders, we note the speeches of ECB politicians Elderson, Schnabel and President Lagarde, while BuBa president Weidman is also scheduled to speak. Also, we note the publication of the account of the monetary policy meeting of the Governing Council held on 27-28 October 2021. In general, if dovishness were detected in Lagarde’s speech or in the protocol, we might see the common currency slip for more a sharp approach by BuBa chairman Weidman could support EUR. At the fundamental level, the path of the pandemic in Europe remains the main concern for EUR traders and could weigh heavily, as some European governments are considering closures to curb the spread of the disease.

EUR / USD continued to fall yesterday breaking below the support line of 1.1225 (R1), now turned to resistance. We maintain a bearish outlook for the pair provided it remains below the downtrend line started since November 10th. Please note that the RSI indicator continues on the reading of 30, confirming the bearish sentiment, but may also imply that it is near oversold levels. If the bears actually hold control over the pair, we may see it target if not break the support line of 1.1165 (S1). If the bulls take over, we may see the pair reverse course breaking the aforementioned downtrend, the 1.1225 (R1) resistance line and targeting the 1.1300 (R2) level.

Other market highlights today

Today we also note the release of the CBI distribution trades from the UK for November and the planned speeches by Haskel of BoE and BoE Governor Bailey. In tomorrow’s Asian session we get the Tokyo CPI rates from Japan for November and the final retail sales from Australia for October

USD Index H4 chart61 9

Support: 96.65 (S1), 96.15 (S2), 95.60 (S3)

Resistance: 97.30 (R1), 97.80 (R2), 98.30 (R3)

EUR / USD H4 chart62 9

Support: 1.1165 (S1), 1.1090 (S2), 1.1000 (S3)

Resistance: 1.1225 (R1), 1.1300 (R2), 1.1375 (R3)

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