– The liquidity empty has begun: trade conditions will be aberrant around a Thanksgiving holiday in a United States this week.
– US markets are sealed tomorrow and usually open for a half-day on Friday; pivotal European information tomorrow might infer meaningful, however.
– Retail merchant sentiment points to churned trade conditions in a US Dollar around a holiday this week.
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FX markets are starting to still down already as traders ready for a mid-week liquidity empty around a US Thanksgiving holiday. The US Dollar, that has been trade weaker via November, might find reduced appearance in markets a relief: traders cite to take increase and block their books before stepping divided for an extended duration of time. It’s not a set of resources that support to breakouts and follow by on momentum, that has been operative opposite a greenback’s favor.
The repairs to a US Dollar’s uptrend from a Sep lows has been documented in new days: a three-week operation from Oct 26 has broken, as good as a uptrend from a Sep 8, 20, and Oct 13 lows.The neckline of what could be noticed as a intensity different conduct shoulders settlement during 94.29 was breached. Momentum has swung reduce as well, with a DXY Index trade next a daily 8-, 13-, and 21-EMAs, and MACD and Stochastics trending reduce (no longer in bullish territory).
As a technical repairs finished to a DXY Index has neutralized a US Dollar’s bullish bias, dual vital pairs find themselves in ranges: EUR/USD and GBP/USD. While I’m not prejudiced to trade ranges – we find them to be boring, to be straightforward – we do like what ranges represent: cost consolidation. Price converging is same to a open coiling, storing adult intensity appetite (the range), watchful for a recover of kinetic appetite (the breakout).
Chart 1: EUR/USD Daily Timeframe (July to Nov 2017)
After bottom on Nov 7, EUR/USD climbed neatly until it ran into a Oct 26 bearish outward engulfing bar high nearby 1.1837. Since then, cost has oscillated between a high and what might have been a neckline of a intensity conduct shoulders settlement nearby 1.1715. In effect, this is a counterpart picture of a operation forged out by a DXY Index given Nov 14, between 93.48 and 94.29.
Chart 2: GBP/USD Daily Timeframe (June to Nov 2017)
GBP/USD has been consolidating for a longer duration of time than EUR/USD. Price pennyless downinto a 1.3018 to 1.3340 operation on Oct 1 and has not traded outward of it given then.
The scarcely dual months of converging haven’t been though drama: conjunction a BOE rate travel nor questions over UK Prime Minister Theresa May’s care have proven suggestive adequate to force a reckoning. For now, quite as we demeanour towards a holiday, we’ll usually wish to keep an eye on this consolidation, though when a dermatitis comes, it should be violent.
As markets breeze down today, don’t boot a calendar. The Oct US Durable Goods Orders news is due out today, as is a Nov FOMC assembly minutes. Tomorrow has a good understanding of excitement, holiday on a setting or otherwise: rough Oct Euro-Zone PMI information to assistance beam expansion expectations as Q4 information stating gets underneath way; and a second recover of a Q3’17 UK GDP reading.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
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