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USD Maintains The Bearish Momentum

Oct 18 2019, 02:46 PM (+06) |

The dollar index fell for the third consecutive day, with price falling to a two-month low.

The declines come amid a weak patch of economic reports. The US-China trade talks also did not offer any fresh news for investors.

As a result, the dollar took a backseat. This led to most of its peers posting some modest gains.

Euro Maintains Gains as US Data Disappoints

Economic data from the United States on Thursday saw a string of weak reports. As a result, the euro maintained its gains. The weekly jobless claims came in at 214,000 in line with the estimates.

Housing starts rose 1.26 million coming below estimates. Industrial production was down, falling 0.4%. This was more than the estimates of a 0.2% decline.

Will the EURUSD Maintain the Uptrend?

The currency pair is in a short-term uptrend. This was confirmed after price breached the resistance area of 1.1075–1.1062. The current gains could see price action aiming for the upper resistance area of 1.1193–1.1176. In the near term though, price action could see a correction back to 1.1075–1.1062.

A retest of this level to establish support will confirm the upside. Alternatively, the bullish momentum could see price rising straight for the resistance level.


UK Brexit Deal Hits a Snag

The pound sterling rallied to a five-week high on initial reports that the EU and the UK reached an agreement regarding Brexit. The news comes just a week before the UK is set to leave the EU and months of deliberation.

But later in the day, the deal was rejected by the UK’s key ally, the Democratic Unionist Party (DUP). The negotiations now remain fluid. This could potentially see some higher volatility in the GBP.

GBPUSD Likely to Post a Correction

The currency pair has been in a steady uptrend. But on Thursday, price action retreated after spiking to a daily high of 1.2989. This comes as price action hit a major resistance level.

The pullback also coincides with the hidden bearish divergence on the daily chart time frame. In the near term, GBPUSD could see pulling back below the resistance area. The lower support at 1.2582 remains due for another possible test of support.


US Crude Oil Inventories Rise More than Expected

The weekly crude oil inventories report saw another week of buildup in oil inventories. For the week ending October 11th, oil inventories were up 9.3 million.

The EIA also said that oil inventories were almost two percent above the five-year average. Gasoline inventories were, however, down by 2.6 million barrels for the same period. It follows a 1.2 million barrels decline from the week before.

Oil Price Bucks the Trend

Crude oil prices managed to post some modest gains despite the bearish fundamentals. Price action remains on track to test the resistance area of the 54.70 – 54.42 region. This comes as oil breaks the falling trend line.

A close above the resistance area is needed to confirm further upside gains. The next main resistance level is at the 57.87 – 57.64 region. To the downside, declines should stall near the trend line that acts as a dynamic support.


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