The Dollar Extended Decline Following Bearish Data And Dovish Minutes
AvaTrade | Nov 23, 2017 02:40AM ET
Summary:
- The dollar staged a swift decline against a basket of six majors following the U.S. October durable orders released in New York session which came in at -1.2% MoM.
- The dollar extended its decline while gold climbed up to a high of 1294.5 as FOMC October meeting minutes showed members still concerned over the inflation in U.S.
The greenback stumbled to a new monthly low on 22 November Wednesday immediately after the U.S. October durable orders released in New York session which came in at -1.2% MoM and triggered the dollar bears enthusiasm. In addition, the prospect of three rate hikes by FED in 2018 was dampened as FOMC October meeting minutes showed that some members still concerned over the inflation in U.S. These members said they would revise down the inflation expectations amid the tepid inflation. The buck fell further and decline as much as close to 100 pips on the week. It seems the dollar down trend is hard to change for now amid the expected light Thanksgiving Day.
Technical
The dollar index (DXY) extended its down trend as it printed a new monthly low. Its short term moving averages went lower sharply, indicating strong short-term downside momentum in the price action of the index, while dragged down its long term moving averages which resumed down move on the 4 hour chart. It will be interesting to watch whether or not the index could continue to descend following short term corrective rebound.
As to non-U.S. currencies, the euro could potentially continue to rally as the shared currency bounced back and came close to highs of 15 November. The British pound came back to circa the upper limit of the trading range for last month, extending its recent rally. Would the sterling stage a direct rise or consolidate below its highs of 13 October still remain to be seen. The Aussie dollar rallied for the second trading day in row and broke above its H4-period EMA60 and holding above it, the commodity currency could potentially extend rally.
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Switching gears to precious metals now, the gold posted as much as 150pips on the day after rebounding to a high of 1294.5. With upside resistance still at highs of last Friday, the price inched lower in the state of corrective decline early Asian session and could potentially whipsaw/consolidate around 1290. Whether or not the yellow metal could stage a bullish breakout for further potential rise amid the expected lower volatility still remain to be seen.
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