Dollar Tries To Pick Up Momentum Again

The recent flight from the US Dollar after the not so exciting Non-Farm Payrolls report continued yesterday as even the strong printing of the Retail Sales report didn’t help the US currency to turn the tables and regain some of its lost ground. It was expected that a bullish reading of a consumer spending report would reveal that the recent improvements in the labour market are finally finding their way to the consumer habits of the US citizens and that would bode well for the Dollar.

However, even though we saw some signs of a correction attempt this was short-lived. It is clear that a number of investors and traders have been counting on the Fed raising interest rates on September and even though this is still on the table it is likely that the turmoil in global markets eg. China will delay that.

Both the Euro and the Pound ended the day lower against the Dollar, the reaction from the markets after the release of the Retail Sales figures was in favor of the US currency but lacked any follow-through during the rest of the day. From a technical standpoint we could see further correction benefiting the Dollar since the previous uptrends have been compromised but for that to take place we will need some kind of spark.

Today the focus will be mainly on the Euro with the release of the Eurozone Gross Domestic Product and inflation reports. The GDP report is expected to print strong and that could allow the Euro to bounce higher again today. Having tested the 1.1100 support yesterday the Single currency traded upwards towards the 1.1150 area during the rest of the day and a further appreciation could lead the currency to the 1.1200 highs while a surprise lower should threaten the 1.1100 support floor.

Cable also traded lower initially yesterday but didn’t find enough momentum to continue its decline after the release of the Retail Sales report. The 1.5600 area is the pivot area for today and if the Cable managed to remain above we could see a consolidation effort for the rest of the week while renewed pressures that would send the currency tumbling again should open the path for the 1.5550 area.

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