Forex News: Political Turmoil in the U.S. Hinders the Dollar’s Recovery
Forex News: U.S. politics took center stage Friday as Michael Flynn, Trump’s ex-national security adviser pleaded guilty of lying to the FBI regarding his communication with the Russian ambassador. The news weakened the US Dollar and reversed the pair from an earlier drop.
Price was moving below 1.1875 support before the Flynn news hit but most of the pair’s losses were erased and now we can clearly see a bounce at the 50 period Exponential Moving Average. The US Dollar will likely suffer from the aftermath of Friday’s developments, so we expect the pair to remain above 1.1875 and possibly move closer to 1.1945.
The only notable release today will be the U.S. Factory Orders, scheduled at 3:00 pm GMT and expected to post a reading of -0.3% from the previous 1.4%. The indicator shows changes in the total value of orders placed with manufacturers and has a medium to low impact on the greenback. Higher than anticipated values strengthen the US Dollar and are indicative of rising production (factories will increase activity to fill the orders).
Friday’s trading session was controlled by the bears although the US Dollar was affected by political turmoil. The pair is now testing the previous resistance, which may turn into support.
The bulls ran out of steam at 1.3550, where the sellers took over and drove the pair all the way down to 1.3450. The way price behaves at this level will determine the day’s direction: if 1.3450 turns into support, thus rejecting the pair higher, then we will most likely see a touch of 1.3500. If the level is broken, the pair will start moving towards the 50 period Exponential Moving Average. However, we expect a rather slow trading session unless surprises happen.
At 9:30 am GMT the British Construction PMI will be released, showing the opinions of about 170 purchasing managers about business conditions in the construction sector. The survey acts as a leading indicator of economic health and higher numbers than the forecast 51.2 usually strengthen the Pound but the impact is low if the actual number matches expectations.
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.