Is The U.S. Dollar Vulnerable To A Correction This Week?

Is The U.S. Dollar Vulnerable To A Correction This Week?

23 May 2016, 13:51

Dear Traders,

We welcome you to a new trading week. Last week, the market was driven by renewed Fed tightening expectations, which led to broad-based dollar strength. Federal Reserve policy maker.s raised the prospects of policy tightening at one of the central bank's next two meetings and market participants are now wondering whether the dollar trend could carry over into this week.

The economic calendar this week is pretty light with no major risk events in the days ahead. The most important pieces of U.S. data will be Durable Goods Orders (Thursday) and GDP numbers (Friday). Furthermore, there will be some Fed speak due throughout this week, underpinning the central bank's hawkish stance. Fed President James Bullard is scheduled to speak in Beijing today, while Fed chair Yellen will speak at Harvard University on Friday. From the Eurozone, we have PMI reportsGDP figures, ZEW and IFO indices scheduled for release within the first three weekdays. We currently see a higher likelihood of some upward moves in the EUR/USD, driving the euro towards 1.1345 and 1.1445. In case the euro falls below 1.1140 we see a next target at 1.1105 before heading towards 1.1050 and 1.10.


The German Manufacturing PMI is scheduled for release today at 7:30 UTC, followed by the Eurozone PMI report. A stronger-than-expected report could drive the pair towards 1.1290. If the EUR/USD marks prices above 1.13, chances are that the pair could test the resistance area around 1.1340.


The British pound declined sharply last Friday but was able to stop its fall slightly below 1.45. Uncertainty ahead of the U.K. referendum continues to dominate the price action in the GBP/USD and sterling reacts very sensitively to any new polls. The most important piece of U.K. data will be revisions to first-quarter GDP numbers on Thursday.

From a technical perspective, it should now be interesting whether the pound remains within its recent uptrend channel or breaks below 1.4470, which could lead to a slide towards 1.44. However, above 1.4575 the pound could head for a test of 1.46 and 1.4635.


We wish you a good start to this week and many green pips.

Daily Forex signals:

View our daily signal alerts

Subscribe to our daily signal service

We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2016 Maimar-FX.

Share it with friends: