- The dollar fell back and traded in a narrow range as U.S. budget deal hit a roadblock
- The British pound pulled back after shooting up because the Brexit concerns offset supports from hawkish commentary of the BOE and its head Carney.
The dollar pulled back slightly and traded in a narrow range against a basket of six majors as hopes for a vote on legislation hit a snag on Thursday 8 February when Republican Senator Rand Paul disagreed with the budget deal’s increased federal spending, according to some media source. We will have to wait and see until the results regarding to whether or not the U.S government would officially shut down revealed today. The Sterling fell back in a roller coaster ride after the hawkish commentary of the BOE and its head Carney overwhelmed by the Brexit negotiation concerns.
The dollar index (DXY) fell back to its H1-period trend support after shooting up. The index formed a minor symmetry triangle above its H1-period EMA30. In addition, its short term moving averages did not reach its long term moving averages which remained bullish and divergent. Another U.S. government shutdown should help the dollar break below its H1-period long term moving averages which acted as supports.
（DXY H1 chart）
As to non-USD currencies, the euro traded sideways in a corrective mode with upper limit at H1-period trend resistance. The British pound rally failed at the circa H4-period trend resistance in roller coaster ride. Look for a potentially sustained consolidation below its H4-period EMA30. The Aussie dollar extended its ongoing downmove, awaiting a potential short-term rally.
（GBPUSD H4 chart）
Take a look at precious metals now. The gold rebounded after the MACD flashed the second bullish divergence signal in a row on the 1 hour chart, however, the price still held below the circa EMA60 for now. Given that its short term moving averages went sharply into its long term moving averages which started to flatten, it will be interesting to watch the potential changes in the relationship of its moving averages.
（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.