US Dollar index
The US Dollar index had reversed its movement back on the positive side as the U.S Senate’s approval of the budget to support the ambitious promise of the tax cut by the president Donald Trump supported the greenback and pushed the price up to the bullish territory. This news is expected to affect the market this week also and that can lead to an extended rally for the Dollar index. However the core durable goods order report due on Wednesday and advance GDP report which is going to release on Friday will decide how far this positive sentiment will go.
On the technical ground, the U.S. Dollar index is facing resistance near the level of 94.00 and the resistance is still looking strong, if the positive sentiments made by the supportive news for U.S. Dollar can help the price to break 94.00 marks then it may reach near to the level of 95.30 in near term. However the GDP data and core durable goods order report data going to release later this week will broadly decide the movement in the index and if both of the reports happen to be positive then we can encounter a sign of bullish reversal in the index but we need to keep in mind that the long-term downtrend in the US Dollar index is still in play and it talks a lot of efforts to break it so for long term it is not advised to hold a long position in the US dollar index but for short term a bullish position can make profit out of the market.
The USD/CAD pair should be the pair in focus for this week as the market had already priced the upcoming rate statement by the bank of Canada to keep the rates unchanged had resulted in a bullish rally in the pair and that price movement had pushed the price above the down channel in the pair and now it is moving in a short-term bullish trend which is expected to continue supported by the strong Dollar.
The break of the resistance in the USD/CAD pair was strong and it makes the journey to 1.2800 marks promising. However, it is important that the rate statement should work according to the market expectation otherwise it will be a huge turnaround in the market. Also if the BoC Governor Stephen Poloz will signal any near-term change in the rate it can fuel the CAD and that can make the USD/CAD pair again go inside the downward channel.
The British pound lost ground last week, but found support near the level of 1.3080 and formed a hammer in the daily candle on the last trading day of last week. even after the fall GBP/USD pair still manages to keep the price above the supportive trendline and we expect the market to continue to find support from this trendline, however if the US dollar continues its bullish movement we can expect a short-term bearish movement in the pair but if the upcoming GDP data will also turn negative then the pair can break the support as overall soft economic reports and slow Brexit talks is putting constant pressure on the British pound.
This market is expected to be choppy in the coming week as the winning of Supermajority by the Japanese prime minister, Shinzo Abe’s Liberal Democratic party has its own negative effect also. The stance over the North Korea issue buy Shinzo Abe is very aggressive and with the win of Supermajority now they have a power to propose a change in the constitution which is currently restricting the Japanese military to stay in a defensive role and a change in the military approach can lead to an increased tension between North Korea and Japan.
On the technical ground, the pair is at the resistance zone and it is expected to take a breath here and then it may give a positive movement but currently, the price action and candlestick patterns are showing a sideways movement in the pair.
For this pair, all eyes of investors will be on the upcoming European Central Bank’s Governing Council meeting on Thursday which will clear the picture of the Eurozone monitory stimulus program.
On the technical ground the pair is trading near to the support level of 1.1700 and the broad movement in the pair is still sideways. The bullish rally it started from the beginning of the year is now taking a breath and in long-term we expect the pair to take correction. However, the movement in the pair next week is broadly dependent on the ECB meeting outcome.