Don’t be Fooled by the Pullback in the Dollar Because….

by Kathy Lien Kathy Lien

Don’t be fooled by the pullback in the U.S. dollar today because the greenback could still strengthen further before the end of the year. Nearly all of the major currencies rebounded because of local factors and not a shift in appetite for U.S. dollars or change in economic fundamentals. There’s been no data so far this week and stocks consolidated after yesterday’s slide. The strength of USD/JPY, which is hovering around 114 and near 1.5 year highs is a confirmation of the dollar’s dominance. To answer the question of whether the dollar will get stronger, we have revisit the 4 main reasons why its been rising this year.

4 main reasons why the dollar keeps getting stronger

1. Good Data
2. Rising Interest Rates
3. Equity Market Pressure
4. Trade Policy

Three out of four of these factors will still draw investors into the greenback.

Read more

Don’t be Fooled by the Pullback in the Dollar Because….

by Kathy Lien Kathy Lien

Don’t be fooled by the pullback in the U.S. dollar today because the greenback could still strengthen further before the end of the year. Nearly all of the major currencies rebounded because of local factors and not a shift in appetite for U.S. dollars or change in economic fundamentals. There’s been no data so far this week and stocks consolidated after yesterday’s slide. The strength of USD/JPY, which is hovering around 114 and near 1.5 year highs is a confirmation of the dollar’s dominance. To answer the question of whether the dollar will get stronger, we have revisit the 4 main reasons why its been rising this year.

4 main reasons why the dollar keeps getting stronger

1. Good Data
2. Rising Interest Rates
3. Equity Market Pressure
4. Trade Policy

Three out of four of these factors will still draw investors into the greenback.

Read more

EUR/USD – Back to 1.20?

EUR/USD – Back to 1.20?

by Kathy Lien Kathy Lien

EUR/USD – Back to 1.20?

EUR/USD will be the main focus for the next 48 hours with November PMIs scheduled for Thursday release followed by the German IFO report on Friday. Marginally firmer data is expected for Germany and softer numbers are expected for France but with industrial production and factory orders falling over the past month, we believe the risk is to the downside for the German and Eurozone reports. EUR/USD raced above 1.18 today on the back of a weakening U.S. dollar, less hawkish FOMC minutes and a small uptick in Eurozone confidence. According to Reuters, the ECB has no plans to change its guidance until late 2018, which is consistent with what we’ve heard all along from the central bank. That mattered little however to a currency pair that was driven entirely by the market’s appetite for U.S. dollars. While that will change tomorrow, there’s no doubt that the technical outlook for EUR/USD shifted with today’s break above the 50 and 100-day SMAs though low liquidity and holiday position adjustments make the move questionable. Until EUR/USD breaks above the November 17th high of 1.1822 in a more meaningful way, the bears still have a chance especially with fundamentals on their side.

Technically, the EUR/USD broke out today but its found resistance at the 2nd standard deviation Bollinger Band. Further more, in order for the downtrend to be erased, EUR/USD needs to break the November high of 1.1860.