Last week the markets saw the US dollar trading mixed. While USDJPY jumped above 104.00 handle, the dollar was weaker against the euro which saw EURUSD rise over 0.50% on Friday alone. Despite an upbeat GDP report for the third quarter which saw the US economy expand at a rate of 2.9% and beating expectations of a 2.5%, the US dollar failed to capitalize on the gains.

It was late Friday’s news about a new probe into Hillary Clinton’s email scandal that sent the dollar weaker. With just two weeks to go for the US elections the uncertainty continues which could keep the dollar trading with volatility into the November 8 general elections.

Besides the data from the US, in the Eurozone, the preliminary flash PMI’s showed a possible rebound in economic activity in the region. Markit’s PMI data last week now puts the prospects of a better than expected growth in the third quarter, details of which will be released this week.  An upbeat print could diminish the chances of more QE expansion from the ECB which signaled just two weeks ago that a decision on QE could be taken at the December meeting.

Technical Outlook

EURUSD: After prices remained choppy, trading back and forth between 1.0934 and 1.0894, the euro broke out to the upside, closing on Friday at 1.0981. This potentially validates the long position that was mentioned on the forum here. Further upside could see the euro rally to as much as 1.1046 before we can expect a pull back to the breakout near 1.0934. As long as this pullback holds at the support, EURUSD could see further gains to 1.11330. The bullish bias could be invalidated on a close below 1.0894.