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

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.