- Pressured by bearish factors, the dollar declined below its H4-period trend support against a basket of six majors. Investors continued to eye the tax reform details.
- The gold rallied to hit 1288 in a zigzag way. Whether or not the yellow metal could sustain its short-term upside momentum still remained to be seen.
U.S. stocks slumped on Thursday 9 November with the three major indices crashed while the VIX index, known as the market’s fear gauge, briefly climbed by 22% amid the increased markets volatility during London and New York sessions. However, Wall Street rebounded sharply to recoup some losses in late New York session as cutting corporate tax rates in an effort to bring companies back to the U.S. was considered as a major step and therefore had significant impacts on markets, although the House and Senate disagreed with some aspects of the tax reform bill. In addition, the dollar declined below its H4-period trend support against a basket of six majors while the non-U.S. currencies bounced back along the gold across the board.
The dollar index (DXY) has declined all the way below its H4-period EMA60 after trading in a narrow range. Its short term moving averages are attempting to cross below its long term moving averages which contracted swiftly on the 4 hour chart. It will be interesting to watch whether or not the dollar could reverse trend on the H4 timeframe.
（DXY H4 chart）
As to the non-U.S. currencies, the euro broke above its major resistance at H4-period EMA60 and could potentially validate its uptrend. The British pound closed higher after vacillating frequently within a wide trading range. The Aussie dollar whipsawed surrounding its H4-period long term moving averages, suggesting vague short-term direction before we could see a clear trend.
（GBPUSD H4 chart）
Now let’s take a look at precious metals. The gold moved up in a choppy trading and created highs since rally twice on the day. However, the price did not rise in unilateral way due to increased markets volatility. Its short term moving averages remained higher above its long term moving averages comfortably which showed bullish and diverging. Investors are advised to watch how the rally will evolve going forward while keep an eye on the upside resistance at above 1288.
（Gold H1 chart）
By JasonZou —— Chief Analyst of AvaTrade China
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.