U.S. Dollar Weakness as Main Driver For Euro And Sterling Gains
MaiMarFX | Jan 17, 2022 10:20
The U.S. dollar underperformed against its major counterparts last week amid elevated risk appetite.
The economic docket for this week is fairly light, which is why our focus will be on the technical picture, rather than on the fundamental backdrop.
h3 EUR/USD – Euro gains as a result of the greenback’s weakness/h3We got a bullish breakout with the pair exiting its recent downtrend channel and clearing the 1.14-resistance. The pair could now be creating a new short-term upward trend channel ranging from 1.15 to 1.13. Euro bulls that dream of a run for 1.16 should wait for an upside break above 1.1530. However, given the fact that the euro was a benefactor of broad U.S. dollar depreciation, rather than strength on its own merit, further gains might be on shaky ground. For bearish momentum to accelerate and drive the euro back into sell mode, we would need to see a break below 1.1250 but more importantly below 1.12.
Our trading ideas for today: Long @1.1435, Short @1.1380. Secure some pips, max TP is 40 pips. h3 GBP/USD – Political instability had no impact on the British pound – at least not until now/h3
While U.K. Premier minister Boris Johnson is facing a tough time, the pound benefits on a softer greenback and shows almost no reaction to a potential ousting of Boris Johnson. Since the pound posted an almost straight-lined upward movement, we expect a correction to happen soon. A break below 1.3650 could lead to a drop toward 1.36, a potential short-term support. We will then focus on a break below 1.3560 with a lower target seen at 1.35. On the upside and if the potential 1.36-support remains intact, the 1.38-mark could act as a resistance.
Our trading ideas for today: Long @1.3710, Short @1.3660. Secure some pips, max TP is 40 pips.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.