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Greenback gathers pace on taper expectations

As the US dollar gained some strength from the growing expectations of a Fed taper next week, the euro pulled back towards the 1.37 level before catching a bounce.

With EUR/USD currently trading at 1.3732, the main resistance to upside is the 1.38 level. It was tested yesterday with the 1.3830 mentioned by my colleague David Madden.

This may mark something of a top for the currency pair for now, until we get more clarity on monetary policy decisions from the FOMC meeting. US ten-year bond yields are in an uptrend and, while it is still below last week’s spike of 2.91%, there is a degree of bullishness surrounding the greenback. This is partly due to the sell-off in equities over the past few days and investors’ need for a safe haven.

1.3620 is the next support should 1.37 fail, so it’s likely we’ll see a range-bound price action for the next week.

Eurozone employment change was as expected and registered no change on the quarter. US PPI later this afternoon is likely to show a small increase on last month. Wholesale prices are expected to rise 0.1% for November, against the decline of 0.2% seen previously.

Spot FX EUR/USD chart

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