The US dollar kept its gains against a basket of currencies as most of market participants looked forward to the post-election press conference by President-elect Donald Trump. Following the victory of Trump, the recovery of the US economy received mixed outlook from various groups which sent the US currency at the offensive track. The announced rate hikes from the Fed supported the strength of the dollar; however, the turn of US economic data slightly slashed the bullish tone.
Against the Majors
After the mid-session on Wednesday, USD/JPY edged up 0.41 percent to 116.24, creating a modestly steady trend. On an hourly chart, the pair had a session high of 116.370 and a session low of 116.169 after opening at 116.238.
The tight trading figures were merely caused by the contraction of the band as of 14:36 UTC. The pair found resistance at 116.446 and support at 115.962 while trading away from its 20-day SMA of 115.952 and 50-day SMA of 115.958.
EUR/USD had a 0.40 percent decline to 1.0514 after opening at 1.05176. The pair had an intraday high of 1.05194 and intraday low of 1.04986 with resistance at 1.05365. EUR/USD moved beyond its support level, extending the bearish tone for the pair. Also, the pair traded below its 20-day SMA of 1.05476 and 50-day SMA of 1.05654.
In a wider perspective, EUR/USD remained steady after the plunged at 1.34000 levels at the start of the year. The European market will likely remain volatile as Britain makes its total exit from the European Union.
Further, GBP/USD missed 0.45 percent to 1.2121 as it entered a narrow band in the middle of today’s session. The pair had a session high of 1.21264 but its session low dipped at 1.21207 levels. Apparently, the skepticism over Article 50 left a massive impact in the British foreign market as market players lost confidence in the currency.
The candles for GBP/USD ticked below the lower barrier, suggesting a downtrend in the coming hours. The pair was also stuck at 1.21200 levels, below its 20-day SMA of 1.2571 and 50-day SMA of 1.21552.
Meanwhile, President-elect Donald Trump is having a press conference at Trump Tower at 11:00 am Eastern Time. The post-election event will either provide a support in the current stance of the US dollar or will break the momentous trend.
Looking through the impact of the President on the currency market, the USD received an unexpected boost after the US election. Prior to the result, uncertainties in the market dragged the US currency at the bottom and a basket of currencies took advantage the situation. Nevertheless, the increase of fiscal spending laid by Trump delivered an instant recovery of the greenback.
Successive upbeat outlook on the US economy immediately arose as the market waited for Trump to take the office. The betterment of the entire financial market puts the confidence back to the US dollar. The odds stayed on the currency after Fed announced the possibility of three rate hikes this year which analysts argued whether the central bank also acquired optimism in the coming adminstration. Normally, a rate hike will result in a currency appreciation, proven in the last few years.
Although there were no definite topics to be discussed in the conference, critics were expecting details of the Affordable Care Act, business plans and interests and economic policies. As part of the political trend, the president’s impulsiveness over his statements would probably be on the list of the press.
On the other hand, the investors could have been waiting with positive notions on their table. The global stocks closed with gains headed by S&P 500 Futures and Nasdaq Futures advancing 0.4 percent and 0.11 percent. S&P 500 VIX added 0.09 percent while Nikkei 225 jumped 0.33 percent. Along with the strength of the greenback, the US Dollar Index went up 0.36 percent.
Most likely, the impression that Trump will leave after the conference can greatly affect the attitude of the traders in the coming sessions. After his proclamation on January 20, can he really “make America great again?”