It was a busy day at the markets yesterday with many unscheduled events continuing to dominate the headlines and moving the markets this way and that. We had the suspense over the tax reform bill which continues but which also looks like it might get settled this week. Then we had the North Korean missile launch and reports of a deal being reached in the Brexit talks.
EURUSD On the Slide
All these unscheduled events pushed the scheduled events to the background and helped to strengthen the dollar overall. One of the scheduled events was the speech from the Fed Chief Designate Powell who basically once again confirmed the rate hike in December and seems quite positive as far as the dollar bulls were concerned. This helped to steady the dollar but it did not bring in too much strength. Then there was the news that the tax reform bill was very much on track and this proved a boost to Trump and his team and hence the dollar as well.
This has since led to a correction in the EURUSD pair which has moved through the 1.19 region and then the support at 1.1870 region and trades in the 1.1850 region as of this writing. We can now see that almost half of the upmove that happened towards the end of last week on low liquidity has been reversed and now we are going to see whether the full move gets reversed by the end of the week which would then be very bullish for the dollar. In fact, the strength of the move in the dollar has been so much that even the missile launch in North Korea has been largely ignored by the dollar bulls.
Looking ahead to the rest of the day, we have the preliminary GDP data from the US and we also have the testimony from the current Fed Chief Yellen and both of these are likely to lend some strength to the dollar. The tax reform bill also continues its passage and further progress in that is likely to keep the dollar well bid.
This article was originally posted on FX Empire