U.S. economic reports serve to remind investors that U.S. economic growth remains solid, and as long as this continues, writing the U.S. dollar off could prove a costly strategy.
Heightened concerns over inflation risks in the U.S. and a consequent monetary policy-induced slowdown in economic growth are keeping U.S. dollar bulls in check.
Around 75 cents is the sell zone, which is close to the 100-day moving average which provided a bridge too far over the past nine months.
The Reserve Bank may shift to a very mild tightening bias which won't be enough to support the Australian dollar while the Fed is pushing up rates.
While a hawkish sounding ECB will protect the downside for the euro in the short term -- support looks solid back to 1.2050 -- the fragile euro-zone economy argues against any interest rate increases for sometime to come.
The price action of the last few days does suggest a potential exhaustion in the dollar's rally.
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