US Dollar Pullback Hits Day Four; US-China Trade War Update; Brexit Latest

Part of me can’t help but recall May’s commentary about not wanting to endure a significant extension, saying it should be only “a matter of months” if one were granted. To this end, a request for an extension to the negotiating window seems likely. It’s possible, given May’s failure to whip together a coalition to support her plan, that she abdicates her role as prime minister and calls for another General Election.

GBP/USD PRICE CHART: DAILY TIMEFRAME (JUNE 2018 TO MARCH 2019) (CHART 1)

US Dollar Pullback Hits Day Four; US-China Trade War Update; Brexit Latest

The concentration in news flow around the Brexit negotiations has contributed to a shift higher in volatility expectations for GBPUSD. Yet more significant price movements don’t necessarily translate into directional moves, as we’ve seen over the past several months. Indeed, since the bearish outside engulfing bar on June 14, 2018, GBPUSD has spent all but 16 days trading between 1.2660 and 1.3365 – that’s nearly 92% of the past nine-months within the range. So, for all the apocalyptic Brexit talk…GBPUSD doesn’t have much to show for it (not yet, anyway).

DXY INDEX PRICE CHART: DAILY TIMEFRAME (JUNE 2018 TO MARCH 2019) (CHART 2)

US Dollar Pullback Hits Day Four; US-China Trade War Update; Brexit Latest

The broader gauge of the US Dollar has made little movement in recent months, today trading at levels seen back in February, January, December, November, and October. It’s possible that price action since mid-November has been coalescing into an ascending triangle against the 97.72 high set in November, December, and retested last week. While this may give a longer-term bullish bias in context of the consolidation developing after an uptrend, right now, the DXY Index’s forecast is necessarily neutral. Four consecutive days of losses has skewed the technical backdrop, with the both daily MACD and Slow Stochastics starting to point lower (albeit in bullish territory). Concurrently, with price enmeshed in the daily 8-, 13-, and 21-EMA envelope, patience is required before the next directional move becomes clear.

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