{"id":108197,"date":"2017-06-28T07:32:10","date_gmt":"2017-06-28T11:32:10","guid":{"rendered":"http:\/\/countingpips.com\/?p=108197"},"modified":"2017-06-28T07:32:10","modified_gmt":"2017-06-28T11:32:10","slug":"the-dollar-sinks-while-euro-rallies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/06\/the-dollar-sinks-while-euro-rallies\/","title":{"rendered":"The Dollar sinks while Euro rallies"},"content":{"rendered":"
June 28, 2017<\/div>
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Article by ForexTime<\/a><\/p>\n

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The last remnants of the once phenomenal Trump rally were thoroughly crushed on Tuesday after the International Monetary Fund (IMF) trimmed its growth forecast for the US economy amid uncertainty over White House policies. Although US President Donald Trump has, on multiple occasions, stated that he will \u201cmake America great again\u201d the IMF seems unconvinced as it cut growth forecast for the US economy to 2.1% in 2017 and 2018, against April\u2019s projections of 2.3% in 2017 and 2.5% in 2018. With the world\u2019s largest economy struggling to hit Trump\u2019s 3% GDP target as it confronts issues ranging from an ageing population to low productivity, sentiment is likely to take a hit with the Dollar finding itself under renewed selling pressure.<\/p>\n

Bearing in mind that the IMF\u2019s growth projection for the US economy was revised due to flailing assumptions of Donald Trump moving forward with market shaking pro-growth policies, this is a big deal and it will be interesting to see how Fed policymakers react.<\/p>\n

Dollar bullish investors who were in desperate need of inspiration to support the Greenback were left empty handed on Tuesday evening after Yellen maintained a safe distance from monetary policy at an event in London. Although she reiterated that \u201cit will be appropriate to raise interest rates very gradually,\u201d this was old news with nothing fresh brought to the table.<\/p>\n

An interesting statement on Yellen\u2019s part was how the banking reforms have currently made the financial system safe, with the next type of crisis that rattled the global markets in 2008 \u201chopefully not in our lifetimes.\u201d While the comment continues to echo her overall optimism over the US and global economy, Dollar bears were unfazed with the Dollar Index sinking towards 96.20 as of writing.<\/p>\n

GBPUSD pops above 1.2775<\/strong><\/p>\n

Sterling bulls were gifted an unexpected lifeline on Tuesday in the form of Nicola Surgeon putting the Scottish independence referendum bill on hold. With the delay of the proposed referendum reducing some political risk at home, the Pound was given room breath. A weak Dollar played a role in the GBPUSD\u2019s rebound as prices sprung towards 1.2850. While short-term technical bulls may have won the battle this week, the war still rages on with Brexit woes likely to limit gains in the medium to longer term.<\/p>\n

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Draghi inspires Euro bulls<\/strong><\/p>\n

Euro bulls were unstoppable during Tuesday\u2019s trading session following the firmly hawkish comments from European Central Bank President Mario Draghi which boosted confidence over the health of the European Economy. With \u201cdeflationary forces being replaced by reflationary ones,\u201d speculation has mounted over the central bank potentially tapering QE in the future. Although the central bank president still highlighted that the inflation dynamics remain muted, there is optimism that the current factors hindering inflation are transitory and as such the Euro found further support. A vulnerable US Dollar complimented the EURUSD\u2019s upside with prices bursting above 1.1300. Technical traders could exploit the decisive break above 1.1300 to target 1.1450.<\/p>\n

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WTI Crude edges above $44<\/strong><\/p>\n

The fundamental reason why oil has remained depressed for such a prolonged period lies in the high global crude inventories. As long as the oversupply woes remain a dominant theme, the bearish sentiment towards oil should ensure sellers maintain control. Although WTI Crude edged higher during Wednesday\u2019s trading session, this technical bounce may provide a platform for bears to install renewed rounds of selling. This remains a critical period for the oil markets especially when factoring in how the extended periods of low prices and US Shales resurgence could cause OPEC\u2019s output cut deal to fall apart. A technical bounce on oil may be on the cards with traders observing how prices react to the daily 20 SMA which is coincidentally at $45.<\/p>\n

Commodity spotlight \u2013 Gold<\/strong><\/p>\n

Gold bulls were unrestrained during Wednesday\u2019s trading session with prices clipping $1252 as the combination of Dollar weakness and risk aversion boosted the metal\u2019s safe-haven allure. The sharp losses observed at the start of the week have almost been clawed back with bulls eyeing $1260. With the ongoing uncertainty of Brexit, political risk in Washington and jitters from depressed oil accelerating the flight to safety, Gold is likely to remain supported moving forward. Technical traders will be paying attention to how the metal behaves above $1250. A daily close above $1250 could encourage a further incline towards $1260.<\/p>\n

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Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime The last remnants of the once phenomenal Trump rally were thoroughly crushed on Tuesday after the International Monetary Fund (IMF) trimmed its growth forecast for the US economy amid uncertainty over White House policies. Although US President Donald Trump has, on multiple occasions, stated that he will \u201cmake America great again\u201d the […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-108197","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=108197"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108197\/revisions"}],"predecessor-version":[{"id":108199,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108197\/revisions\/108199"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=108197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=108197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=108197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}