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Talking Points:
- While the U.S. Dollar’s longer-term up-trend remains in-tact, the past few weeks have seen the currency continue to pull-back, now retracing more than 38.2% of the ‘Trump Trade.’
- GBP/USD has run-up to a fresh 2017 year high a day ahead of a widely-awaited UK Supreme Court ruling on whether Theresa May needs parliamentary approval to trigger Article 50. A ruling is expected tomorrow, and this could keep GBP volatile for the foreseeable.
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Dollar Drops to Support After Trump Inauguration
Judging by the combination of weekend news and recent price action, the Donald Trump inauguration speech was not as well-received as the victory speech on the night of the election. While President Trump’s victory speech on the evening of November 8th evoked reversals across U.S. markets, futures contracts on equities and the U.S. Dollar included, Friday’s inauguration speech did little to motivate price action as the U.S. Dollar simply slid back-down to support.
The major difference between the two speeches was focus: In November, President Trump talked of infrastructure spending and fiscal stimulus. On Friday, the central theme was ‘America First.’ The change-in-focus could very much be to blame, but more proactively this varied message does not denote to markets or investors that anything has changed. So the longer-term bullish structure in the Greenback remains, but short-term price action is finding support at a level of prior resistance, around 100 on DXY.
Chart prepared by James Stanley
Below, we look at the 4-hour chart with a heavier-focus on this recent pullback. A Fibonacci retracement has been applied to the ‘Trump Move’ in the Dollar, taking the lows of election night up to the high set just a few weeks ago. The 50% retracement of this move is at .9985, and this makes up the bottom-portion of a support zone that could be pivotal for this week’s price action.
Chart prepared by James Stanley
British Pound Pops to Fresh 2017 High – UK Supreme Court Ruling to Keep GBP Volatile
Last week brought the widely-awaited Brexit speech from PM Theresa May (and U.K. inflation), and the net-impact has strength into the British Pound, aided at least in-part by that recent dash of weakness in the Greenback. But we’re not done on the news from out of the U.K. just yet: