Dollar Weakness Continues Despite Upbeat Employment Data

OctaFx Analyst Team OctaFX

Today, the price of bitcoin fell sharply after news from South Korea signalled an intense crackdown on bitcoin exchanges. This follows last week’s hack and ultimate bankruptcy of an exchange called YouBit. As of this writing, bitcoin is currently down by 7.29% to trade at $14,212.

As bitcoin was falling, another cryptocurrency, Ripple, was surging after the company inked a deal with a major Japanese credit card company that will utilize its technology. The currency gained more than 20% to a record $1.43 which makes it the third largest cryptocurrency after bitcoin and ethereum.

The major global indices in Europe had a mixed trading day with DAX, EURO Stoxx 50, and CAC 40 dropping by 0.14%, 0.39%, and 0.18%. The FTSE and Bovespa were the outliers gaining by 0.13% and 0.42% respectively.

In Asia, stocks continued to rally with the Hang Seng, Shanghai, and China A50 gaining by 0.90%, 0.63%, and 0.81% respectively.

In the United States, the Santa rally continued with all the major indices expected to open in the green. This followed the release of positive economic data that showed a reduced number of jobless claims which are currently at the lowest level in more than 4 decades.

The positive data did not help the dollar, which continued to decline to establish a double bottom position. The dollar index is currently trading at $92.67, which is its lowest position since 1st December.

WTI and Brent crude oil are currently trading near their 3-year high. Traders are waiting for the weekly inventory data from the EIA with expectations of 3.95 million barrels.

EUR/USD

The EUR/USD pair continued its upward trajectory despite the positive employment reading from the United States. It is currently trading near a 1-month high of 1.1945 level. Investors are optimistic that the Euro has a better chance than the dollar in the coming year since there will be no major elections or exits.

As shown above, the pair is currently trading at a double top position and at the top of the Elliot Wave pattern. Also, the RSI shows a pair that is increasingly overbought. Therefore, in the short term, we can expect a minor pullback as traders close their end of the year positions and take profits.

EUR/NZD

This month, the pair has fallen from 1.7474 to the current 1.6861 level. Its attempt to gain ground that started on the 18th failed, leading the pair to trade in a sideways direction. Perhaps, the sideways trend will be broken on Tuesday when we get economic data from Germany, which is expected to release its manufacturing data.

USD/CAD

This week, the USD/CAD pair has dropped to its lowest level since October. It is currently trading at 1.2593 which is a major support level. The huge sell-off is attributed to the weaker dollar. As mentioned, investors are cautious about the dollar following last week’s signing of the tax reform package that is expected to increase the country’s deficits. As the dollar weakened, gold – a favourite safe haven – strengthened to its highest level of the month. If it breaks this support, the pair could test the next support level of 1.2442.

Author

OctaFx Analyst Team

OctaFX

OctaFX is a market-leading forex broker, providing personalised forex brokerage services to customers in over 100 countries worldwide.

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