- The greenback continued to rally as investors sentiment toward the dollar improved following the approval of the Republican tax bill by the Senate Budget Committee on Tuesday.
- The major risk event and macro data to watch today include the revised figure for the annualized U.S. Q3 GDP QoQ and the Federal Reserve Chair Janet Yellen testimony before the Joint Economic Committee on the country’s economic outlook.
The dollar recouped half of last week’s losses against a basket of six majors in the choppy Tuesday 28 November trading. According to foreign media sources, the Senate Budget Committee approved the Republican tax bill with the Republican Ron Johnson backing the measure ahead of a vote on Thursday. By the way, during the much-anticipated confirmation hearing, Fed chair nominee Jerome Powell sounded little policy change. We need to keep a close eye on the revised figure for the annualized U.S. Q3 GDP QoQ. In addition, the Federal Reserve Chair Janet Yellen will testify before the Joint Economic Committee on the country’s economic outlook today.
The dollar index (DXY) rallied to H4-period trend resistance. Given that the short term moving averages have reached its long term moving averages which remained modestly bearish and diverging but flattened slightly on the 4 hour chart, it will be interesting to watch whether or not the former could move into the latter further. With strong upside resistance at circa EMA60, the dollar could potentially stage a bullish breakout if aided by the GDP figure tonight.
（DXY H4 chart）
As to non-U.S. currencies, the euro declined by almost 100 pips to its H4-period trend support on Tuesday. Keep an eye on the short-term changes in the downside momentum of the shared currency. The British pound finally closed above the upper limit of the daily trading range following a report on the final Brexit deal. The breakout, however, need the confirmation of the price action on Wednesday and Thursday. The Aussie dollar inched lower in the short term, whipsawing frequently on Tuesday. Wait and watch until we see a clear trend of the commodity currency.
（GBPUSD Daily chart）
Let’s take a look at precious metals now. The gold whipsawed amid various news on Tuesday. Its short term moving averages moved down into its long term moving averages again after the failure to extend their ascending although supported by the latter group on the 1 hour chart, could potentially converge along with the latter group and start to flatten ahead of U.S. GDP tonight. Keep an eye on the short-term downside support at circa 1290 follow by 1287.8.
（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.