- The dollar staged a bullish breakout from its H1-period trend resistance following some U.S. macro data including in-line-with expected core PCE price index for December and January Dallas Manufacturing Business Index which smashed expectations.
- We will have the fist assessment of the Q4 GDP YoY in Euro area at 1800 today BJT. In addition, Donald Trump will deliver his first State of the Union address on Tuesday.
The dollar staged a bullish breakout from its H1-period trend resistance against a basket of six majors on Monday 29 January following some U.S. macro data including in-line-with-expected core PCE price index for December and Dallas Manufacturing Business Index for January which smashed expectations. This could mean we’re looking at an astonishing week for the dollar. We will have the fist assessment of the Q4 GDP YoY, January Consumer confidence survey in Euro area and Germany CPI for January, all due at 1800 today BJT. In addition, Donald Trump will deliver his first State of the Union address on Tuesday. All these major data and events could have important implications.
The dollar index (DXY) broke above and retested its H1-period EMA60 with imminent resistance at its H4-period trend resistance. The index is expected to trade in a narrow range ahead of EU GDP report, with the upper limit at 89.55-89.73 and lower limit at circa 89.09 and 88.68.
（DXY H4 chart）
As to non-U.S. currencies, the euro traded in a range between its H1-period trend resistance and H4-period trend support after a corrective decline on Monday. Look for directions from GDP report. The British pound pulled back to test its H4-period trend support in a volatile manner. Whether or not the sterling could bounce back again above its EMA 60 will be important to watch. The Aussie dollar traded in a narrow range on Monday before the commodity currency broke below the trading range early this morning with further downside support at its H4-period EMA30. It is prudent to wait and see in the short term.
（GBPUSD H4 chart）
Let’s take a look at precious metals now. The gold declined sharply to break below its H4-period rising trend line. Its short term moving averages moved swiftly into, even possibly cross below its long term moving averages which tended to flatten on the 4 hour chart. A short-term and weak retracement could indicate a further decline going forward.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.