As we opened the trading session on Monday, we obviously gapped lower in favor the US dollar during Asian trading, perhaps in reaction to the tax bill making significant gains through the US Senate.
The economic calendar is taking a breather today but will return with bang tomorrow. Market participants are looking forward to two major central meetings as the Bank of Japan and especially the European Central Bank take centre stage.
The EURUSD pair initially tried to rally during the session on Wednesday, but then fell significantly towards the 1.13 level below.
Thanks to soft US economic data of late, expectations about an aggressive rate hiking cycle by the Fed has diminished.
Last week was a bad one for the US dollar. Market participants questioned whether it was premature to assume a June rate rise was forthcoming and that the path of future interest rate rises would be the same as those as set out by the FOMC’s projections.
Financial markets opened in a bit of a panic mode overnight in the wake of Trump’s failure to repeal Obamacare. Stock index futures slumped while the dollar index fell to its lowest since mid-November as the yen and euro both gapped higher. The dollar’s losses steepened after the London open as the GBP/USD climbed to near 1.26 handle and EUR/USD neared 1.0900. European stock indices bounced off their lows slightly.
The EURUSD pair initially fell during the day on Friday, but found enough support at the 1.0750 level to turn these around to form a hammer.
The euro finds itself higher across the board. The EUR/USD has risen above the 1.0800 handle again, the EUR/GBP to 0.8650 and the EUR/JPY was back at 120.00 at the time of writing.
EURUSD failed to break below 1.0493 support and is now facing the channel resistance.
The EURUSD pair rallied on Monday, as we continue to see plenty of volatility.
