- The dollar resumed its down move against a basket of six majors, indicating the rally in the month coming to an end, while the non-USD currencies and gold all rebounded.
- We should pay attention to Trump’s infrastructure plan and the U.S. CPI and retail sales for January this week.
Whilst the U.S. stocks recovered after hitting a bottom, the dollar retreated after shooting up on last Friday 9 February. The dollar has been on the rise before Wednesday before saw wild swings on both Thursday and Friday. The potential U.S. government shut-down in the past days has little impact on the markets. In addition, the precious gold and silver posted about 1% weekly losses against the backdrop of the sharp declines in the U.S. stocks which drew a lot of attentions. Investors will turn their attentions to Trump’s infrastructure plan and the U.S. CPI and retail sales for January this week.
The dollar index (DXY) extended retracement in Asian session Monday after reacting off weekly highs. Its short term moving averages went into its long term moving averages with strong downside momentum on the 1 hour chart. Be on the watch out of the potential reversion of the rally since last week.
（DXY H1 chart）
As to non-USD currencies, the euro bounced back above its H1-period EMA60. A holding above the level could end the corrective decline in the past days. The British pound also seemed to rebound at lows with bullish divergence pattern in its MACD indicator on the 4 hour chart after sharp declines last Friday. Having broken out its downtrend on the 1 hour chart, the Aussie dollar rallied in a choppy move after finding supports at the circa daily EMA200.
（AUDUSD H1 chart）
Switching gears to precious metals, the gold staged a swift rally since late Friday session and into early this morning as its down move slowed down significantly and indicated weakened downside momentum. The price is hopefully to challenge its descending trend resistance. Look at its long term moving averages which could potentially act as stiff resistances at the circa 1326.5 on the 4 hour chart.
（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.