- The dollar closed lower against a basket of six majors on the daily chart following the potential delay of Senate tax vote to later Friday.
- The gold declined further, reaching and finding support at the lower boundary of the wide daily trading range.
- Watch whether or not the majors could extend the current trend as we will have some important macro data on the day.
The dollar closed lower against a basket of six majors Thursday 30 November after frequent ups and downs. The dollar continued to slip by as much as over 70 pips against a basket of six majors on the day after the in-line-with-expected U.S. October PCE release and news that President Trump has a plan to replace Secretary of State Rex Tillerson. The index recouped some of losses however as the tax bill gained support from the key Republican Senator John McCain although Senate vote on the bill was postponed to Friday. As far as the tax bill is concerned, the key hurdle to the final version which will become effective after Trump signed on Christmas Day is to resolve differences between the House and the Senate.
Having consolidated two days, the dollar index (DXY) finally formed the corrective decline on the 4 hour chart and saw its short term moving averages go down in the state of divergence and comfortably below its long term moving averages which saw their descending and divergent bias resurgent modestly. On this timeframe, whether or not the price action could extend the corrective decline and test the lows of Monday will be important to watch.
（DXY H4 chart）
As to non-U.S. currencies, the euro came under pressure and briefly created a new weekly low amid the worse-than-expected inflation figure in the euro area. The shared currency reclaimed the relative highs of the week soon after the political risks eased as The Social Democratic Party of Germany agreed to form a government with Angela Merkel’s Christian Democratic Union of Germany. The British pound gained ground again with strong upside momentum, targeting highs of late September. The Aussie dollar whipsawed at the relative lows and could potentially decline further in the short term, with downside level to watch at lows of 21 November.
（GBPUSD Daily chart）
Now let’s take a look at precious metals. The gold declined below the important 1280 to the lower boundary of the prior wide trading range after losing ground further. It will be interesting to watch whether or not the price could stage a corrective rebound in the short term as it was declining steadily in the 1 hour chart. We should review the markets and the logic behind the price action when the gold slipped along with the dollar.
（Gold Daily 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.