- Wall Street closed higher on Black Friday with three major indices all soared while the greenback was sold and hit a low of 92.58 against a basket of six majors.
- Investors should be cautious this week as we will get a flurry of risk events and economic indicators.
The three major indices all closed higher on Black Friday, 24 November, with Standard & Poor’s 500 breaking above 2600 for the first time ever on the basis of closing level. Meanwhile, the buck was sold on the same day. The dollar declined sharply over the past week amid the uncertainty over tax reform in U.S., the dovish inflation prospect on FOMC minutes and the rising euro thanks to the growth in the euro area. We will have speeches from Fed officials including Powel and Janet Yellen, tax reform voting, EU CPI, U.S. PCE and ISM manufacturing index, among other things. All those risk events and macro data could potentially have significant impacts on markets on the week.
The dollar index (DXY) fell further. Given that its short term moving averages remained bearish and diverging after crossing below its long term moving averages which were dragged down and even started to go lower after turning completely convergent, it will interesting to watch whether or not the price action could sustain its weakness.
（DXY H4 chart）
As to non-U.S. currencies, the euro has been on the uptrend and staged a three-wave rally structure according to the Elliot Wave Principle after breaking above highs of 15 November on the daily chart. Keep an eye on its upside momentum. The British pound rebounded and whipsawed around the upper limit of its daily trading range for now, poising to correct. The Aussie dollar extended decline after closing lower in a choppy Friday trading. Keep an eye on the commodity currency’s downside momentum on the daily chart.
（GBPUSD Daily chart）
Switching gears to precious metals now, the gold failed to stage a bullish breakout amid the weakness in the dollar. But the yellow metal rebounded sharply on early Asian session, could potentially shape a catch-up with its non-U.S. currencies, targeting highs of 17 November. With strong downside support at H4-period EMA30, we should keep an eye on its uptrend on the timeframe.
（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.