The US Dollar managed to put up a fight in the last few trading session after a really tough week last week. This is in part due to comments from Jerome Powell last evening, who is expected to be the next FED head. Now, the market has paused in wait for the US Q3 GDP report.  

USD is putting up a decent fight today

USD Supported By Powell’s Comments   

The US Dollar started forming a bottom on Monday after a terrible week last week. At the time it didn’t look like it was reversing, but yesterday the reverse became clear. The USD started climbing higher and ended the day with reasonable gains across the board. This excludes GBP/USD of course, which is prone to Brexit comments as has been the case over the past 18 months.  

The biggest gains came after comments from the next FED Chairman, Jerome Powel. He gave a speech yesterday which sounded hawkish for the US economy, if he keeps his word.

He said that regulation is tough enough on the banking and financial sector. This falls in line with Trump’s fiscal plan, which aims to ease the regulation in business. This is positive for the US economy, at least for the short term.        

USD traders like this sort of environment, so the Buck is reaping the benefits at the moment. This might be a big shift in the US Dollar after a rough year, although we must wait a bit longer for the long-term bullish sentiment to build up.

These are just the first comments, but Trump likes Jerome Powell more than Janet Yellen for this very reason; they’re both right-wingers and like to be light on regulation. That is supposed to be good for the economy, hence the overnight climb in the USD.     

US GDP Report Up Next

The second estimate for the Q3 US GDP will be released shortly and the market seems to be waiting on the sidelines after a lively European morning. In the first reading, the US GDP picked up in the third quarter after a soft second quarter.  

 Now, the GDP for Q3 is expected to be revised higher again, from 3.0% to 3.3%. This is not just for the third quarter; it is the annualized number for Q3. Yet, it will still be a very decent number if it comes as expected.  

If we see 3.3% or higher today, market sentiment will improve for the USD. The first sign was when the USD reversed higher in the last few trading sessions and Powell gave a helping hand. However, if today’s GDP number is positive this will increase the trust in the US economy.  

The US Dollar needs some incentive and it looks like the pieces of the puzzle are falling in line with Trump’s fiscal plan and the new FED Chair. Although it will take some time for the momentum to build up, the GDP report today will be an important part of the puzzle.

Trades in Sight

Bullish EUR/CHF

1. The bigger trend looks bullish in the last 5 trading days
2. The retrace seems to be over
3. The 100 SMA is providing support on the H1 chart
4. The previous hammer candlestick is a bullish signal

The 100 SMA held well today on the hourly chart

We already opened a buy forex signal in EUR/CHF and at the moment it is looking good. We went long after the previous hourly candlestick which closed as a hammer. That is a reversing signal after this morning’s downtrend and the reverse is taking place already. Also, the 100 smooth moving average (red) was providing good support, so the H1 chart looks pretty bullish.      

In Conclusion

The US Dollar is in a good mood today but the US GDP report for the Q3 is coming up. It might ruin the momentum for the Buck or it might give the USD additional fuel, depending on the numbers. Well, hang around for an update on the market right after the release.