As today is the last day of the week and the last day before Christmas, it will be very interesting to see how the currencies will behave ahead of the holidays.
Yesterday, GBP/USD continued its downward move breaking important support levels, only to find a temporary stop at 1.9810. The pound seems to be very weak against its other counterparts and especially the dollar. Reasons for this is more disappointing economic data out of the UK and also the fact that traders are now pricing in at least two more rate cuts next year, after the BOE dovish minutes who saw 9 out of 9 to deciding on a cut. The market was expecting 2 out of 9 to vote for a cut in the last meeting, however the result really took everyone by surprise and therefore the sterling fell further.
GDP out of US was as expected, therefore didnâ€™t really sparked any reactions form traders, who kept selling the euro. EUR/USD printed another new low a few pips away from 1.43, however the euro bulls protected 1.43 and the pair retraced since then.
Today the economic calendar is almost empty, with US personal income and expenses and PCE the only news.
Traders are in a full mode for more dollar gains and that is clear as EUR/USD sells aggressively on every attempt to take out 1.4410. This might continue today, as liquidity is really low as most traders are getting ready for the Christmas celebrations!
EUR/USD is trading within tight ranges at the moment and only a clear break of either 1.43 or 1.44 can give the pair some life for more movements. Good shorting levels now are 1.4425 ahead of 1.4450 and buy positions are only to be taken at low levels with a stop under 1.43.
GBP/USD is correcting today after the big fall, although the pair looks weak with a scope of 1.96 in the coming trading days. A retracement back towards 2 cannot be ruled out of course, however use any good levels to short, with stops above 2.
Letâ€™s see how things will progress from here and how the dollar will end this year.
The fact that almost every January dollar seems to be strong all across the board, might be the catalyst for EUR/USD to reach its short term 1.41 target before another wave up maybe towards recent highs!
Merry Christmas to everyone, enjoy these special days and remember that the market will always be there for gain opportunities, to make the start of the year even more successfulâ€¦