More weakness from the US Dollar, more gains for the rest of the majors was once again the theme of the markets during the past 24 hours. Fresh reports from the US revealed continued slack in the domestic economy and comments from Fed policymakers weighed down on the currency and allowed the recent rally in the Euro and Cable to extend its gains.
During the whole week we’ve seen an interesting correction in most major pairs against the US Dollar and we have explained in our recent reports that this was more or less expected. The number of short positions had been in extreme levels across all Dollar counterparties and some profit-taking would have been natural. This paired with a number of reports that printed lower than expected in the main driver behind the decline of the Dollar since the fundamentals haven’t really changed.
The Euro made it all the way to the 1.0800 barrier yesterday but again we have to note that the momentum behind the move has been diminishing. It’s not clear yet whether a reversal to the downside again is the next move but we believe that with the sentiment in the Euro-zone remaining fundamentally bearish a reversal should be expected at some point. The important level of support lies at the 1.0700 area and as long as this is not threatened the Euro can remain afloat for the time being.
The Cable reached its previous heights yesterday as it hit the 1.4970 mark lifted by the current Dollar weakness. It has been an impressive rally from the UK currency that remains unfazed by the uncertainty surrounding the domestic political agenda with the upcoming elections only a couple of weeks away.
The focus for the day ahead will be on the Cable as the release of the employment data has the potential to keep volatility at high levels. An improvement in the labour market data would allow the Cable to reach and possibly break above the key 1.5000 barrier but we should also be conscious of a potentially weaker report that could send the currency back lower towards the 1.4800 area.
Economic Calendar
Recommended Content
Editors’ Picks
EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.