At the start of the last trading week for 2017 last Friday’s positive sentiment for the USD appears to have evaporated, as our USD index based on the euro, British pound, Japanese yen and Aussie continues to pull back sharply ahead of the crucial vote on the US tax reform bill, despite news that the bill is likely to be passed by the end of this week.
From a technical perspective any downside target for the index lies at 11930, the price region responsible for creating the double bottom candle pattern of late November/December, and from which the index then rallied to touch a high of 12050. This price point is now our upside objective, but given the usual political posturing and grandstanding in the run up to the vote itself, in the short term we can expect the index to trade within its current relatively narrow range. And with much reduced liquidity due to the upcoming holidays, and end of year squaring expect any price moves to be highly volatile and erratic.
By Anna Coulling