Forex Today: US Dollar recovers ground; false breakout in EUR/USD?

Market Analysis /
11 Jan 2019

LDN/NY Wrap:

* US Initial Jobless Claims: 216k vs 225k expected
* Dovish comments from FOMC member Bullard initially weighed on the US Dollar
* Bullard is concerned Fed is on the precipice of a policy mistake and stated that he wanted to mention softer inflation expectations in the recent statement
* Fed Chair Powell reiterated that the Fed can move its policy flexibly and quickly if economic data warrants it


The US Dollar managed to recover slightly on Thursday, as the upbeat comments from Fed Chair Powell trumped the dovish statements from FOMC member Bullard. While there has certainly been some USD-bearish development recently, the US economy is on a solid footing and the Greenback remains king in times of uncertainty.

The Euro lost momentum after the breaking above the 1.15 resistance level yesterday. The key level to watch to the downside is 1.1420, as a clear break could indicate a false breakout and potentially intensify selling pressure.


The downtrend in USD/CAD paused temporarily. The currency pair managed to close the trading day slightly higher, following six continuous days of losses. Nevertheless, the Canadian Dollar could remain bid in the near-term as oil prices continue to rise.


Meanwhile, the British Pound continues to consolidate. Many traders prefer to remain on the side-lines ahead of the Brexit vote next week, as we are likely to see some erratic moves in the GBP pairs.

The Session Ahead:

* Economic calendar is light; focus will be on Australian retail sales data, expected to arrive at 0.3 % month-on-month and unchanged from the previous month
* Market participants are still waiting for a more detailed update about the trade talks being held between the US and China
* US President Trump showed himself optimistic on Tuesday, but the lack of details is causing some concern
* Stock markets are unlikely to extend gains significantly until there is more clarity about what has been achieved in Beijing

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