- The euro was pressured while the dollar took a breather amid German political uncertaint
- The gold tumbled 200pips instead within the overall expanding range-trading after failure to establish the uptrend.
The dollar rose against a basket of six majors thanks to the heightening political uncertainty in the euro area where the economic powerhouse was facing the biggest crisis in 70 years after slipping on Monday 20 November. The euro has declined in New York session as German Chancellor Merkel had said she would prefer new elections over a minority government after the Free Democrats (FDP) unexpectedly pulled out of the negotiations. On the contrary, the greenback rebounded sharply after it filled the gap which was created on Monday. In addition, the gold lost ground sharply and surprised market participants.
The dollar index (DXY) formed a V-shape rally after declining and filling the gap on Monday to retest the H4-period trend resistance. On this timeframe, its short term moving averages has started to enter into the long term moving averages which showed signs of contraction, could potentially stage a bullish breakout.
（DXY H4 chart）
As to non-U.S. currencies, the euro was pressured amid the political uncertainty in Germany to test the significant downside support at H4-period EMA60, watch whether or not the shared currency could hold above the aforementioned support. The British pound reacted off highs again. The road of rally close to the upper limit of the daily trading range seemed to be bumped on the 1 hour chart. Whether or not the sterling could stage a bullish breakout still remain to be seen. The Aussie slipped again and created a new low early Asian session after consolidation on Monday. The commodity currency fell further on the RBA November meeting minutes released early this morning.
（AUDUSD H4 chart）
Let’s take a look at precious metals now. The gold decline accelerated in New York session after the failure to establish the uptrend. The trading range is expanding with the downside support at weekly EMA60 and upside resistance at highs from last Friday. It would be prudent to employ a short-term trading strategy until a clear trend surfaces.
（Gold H4 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.