Forex News: The Greenback Takes a Hit from Dovish FOMC Minutes. U.S. Banks Closed for Thanksgiving Day
Forex News: The FOMC Meeting Minutes revealed yesterday that a few members were worried about weak inflation and were against a near term hike. This generated US Dollar weakness and allowed the pair to climb close to 1.1825 resistance after a bounce at support.
An encounter with 1.1825 resistance is imminent, mostly because the US Dollar is weakened by the dovish FOMC Minutes. If the level is broken, the next target will become 1.1860, followed soon after by 1.1875 but by the time these levels are hit, the Relative Strength Index will probably become overbought, thus calling for a pullback. Price action will be affected by Thanksgiving Day, so caution is recommended.
The United States celebrate Thanksgiving Day, so banks will be closed and no economic data will be released. This holiday will surely affect volatility so we expect choppy price action, especially in the NY session.
On the Euro side we have the Manufacturing and Services PMIs, both scheduled at 9:00 am GMT. These are surveys of purchasing managers from the respective sectors, which act as leading indicators of economic health, but the impact is usually low-to-medium. The forecast is 58.3 for the Manufacturing PMI and 55.3 for the Services PMI; usually higher readings strengthens the Euro.
The greenback took a hit yesterday from the dovish comments made by FOMC members, so the pair showed bullish price action, breaking the resistance at 1.3280 and approaching the key level at 1.3320.
The latest momentum is clearly bullish but the pair is approaching a very important resistance zone at 1.3320 and the Relative Strength Index is approaching overbought. This makes us anticipate a bounce lower somewhere around 1.3320 but we don’t expect 1.3280 to be broken to the downside. As long as the pair remains above 1.3280, our view is bullish, anticipating a break of 1.3320.
At 9:30 am GMT the Second Estimate version of the British Gross Domestic Product will be released, showing changes in the total value of goods and services produced by the economy. This is the main gauge of overall economic performance, so higher numbers than the forecast 0.4% strengthen the Pound but this version tends to have a lower impact than the Preliminary, which was already released.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 7-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.