After a long weekend for UK and US, traders are back today, in a dollar bullish mode, after both EUR/USD and GBP/USD found a temporary top at 1.4060 and 1.5950 respectively. Markets are down since Asia session and the same happened after London opening, amid new worries that economic stability may be prolonged and also geopolitical concerns over North Korea€™s latest missiles , which are driving dollar and yen higher as a need of safe haven currency is coming back in focus.
The EUR/USD has been rising exceptionally since last week; however the pair found a top at 1.4050 and the dollar bulls took their revenge by selling off the pair since early European open. For now, 1.3830 has to keep intact if another wave of upside is to be seen in the coming days. A clear break of 1.3830 ahead of 1.3760 may put the pair back on the defensive towards 1.35. The current retracement in the pair may be just that: a simple retracement after many days of rise in the European currency. If the current levels hold, we may see the pair rising again if economic data and events also assist.
The economic calendar has not got many important releases today, with some releases out of Europe which came out mixed and later on consumer confidence out of US which is expected to give us a more positive number now, as the US government together with FED are trying their hardest to lift consumers spirits up on any given occasion. The reaction in the news are limited today, as markets are still on holiday mode and also the latest missile tests form North Korea are the main events which occupies everyone€™s attention. There has been negative response out of UN and many European officials condemned the latest actions and at a time that economy suffers worldwide, these actions do not help traders to be optimistic about the future.
Investors are still confused as how to feel about the economic outlook and this is very obvious when we take a look at stocks and equities, as one day€™s rally is been wiped off the next day. The possibility of another market selloff is so real especially if economic numbers continue to prove that the recovery is not under way. This is the main reason why traders are poised to keep positions open for long and also why we see such extreme trading conditions with one day currencies rise more than 200 points and the next a reversal occurs. Until market participants are more certain as to what tomorrow brings, the moves may be choppy and with no direction.
Let€™s see how New York opens and if the current situation is just a consolidation before another upside rally commence€¦