- The dollar staged a bullish breakout its H4-period trend resistance against a basket of six majors on the latest news about budget fight under Trump Administration.
- Gold pressured to the circa 1310 as risk aversion eased after North and South Korea agreed on negotiations to resolve problems.
The dollar retested the original level of the bullish breakout for now on Tuesday 9 January after breaking above its H4-period trend resistance on the latest news about budget fight under Trump Administration. While the gold declined to the circa 1310 as well, it could shape another potential rally going forward if the bipartisan congress increasingly disagrees about putting DACA into the new government budget bill.
The dollar index (DXY) retested its H4-period EMA60 after breaking above it. The index saw its short term moving averages moved up into and could potentially cross above its long term moving averages which continued to contract, indicating the highly probability of challenging the on-going downtrend on the 4 hour chart. We are now on the lookout for the potential extension of the rally on the day.
（DXY H4 chart）
As to non-U.S. currencies, the euro decline on the week seemed to stall above its H4-period EMA144. Whether or not the shared currency could stage a corrective rebound will be important to observe. The British pound shaped a corrective decline and held above its H4-period EMA60 for now. Seeing its short term moving averages turn higher after convergence on the 4 hour chart will be required for a rally and retest its prior highs. The Aussie dollar inched higher in a corrective mode after declining to H4-period EMA60. Whether or not the commodity currency could continue to hold above it will be interesting to watch.
（AUDUSD H4 chart）
Switching gears to precious metals now, the gold seemed to rebound again after catching up with a decline to circa 1310. The main reason the gold lost ground yesterday was the news that North and South Korea agreed on negotiations which sent out positive signs and dampened risk aversion. However, given the modestly strong downside trend supports on the 4 hour chart, it will be interesting to watch whether or not the yellow metal could resume its uptrend going forward.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.