After losing ground against most of its peers yesterday, the US dollar paused on Tuesday as market participants re-evaluate whether there is further dollar weakness ahead.
The dollar index fell more than 2.4% in the past two weeks amid easing trade tensions with China and positive developments with Mexico. The initial move was triggered by President Trump’s intervention a couple of weeks ago, when he expressed his dissatisfaction with the Federal Reserve’s current hiking cycle, saying he was “not thrilled” with the Fed raising rates and that the central bank should help him boost the economy. As the Mexico deal has neared closing, Trump said it was “not the right time to talk” to China, but now he says China wants to talk.
Investors started to load risk again, which sent the greenback to monthly lows. EUR/USD climbed to 1.17 this morning, the highest level since 1 August. The pair is testing the 1.1709 resistance level (Fibonacci 38.2% on January 2017 – February 2018). A break out of the latter would open the road towards the next resistance at 1.1851 (high from 14 June), then 1.1960 (200-day moving average).
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