In the last few days, we have seen some sort of consolidation in most major forex pairs. You can consider this as a USD pullback if you must since EUR/USD crawled about 150 pips from the low at 1.0350 about a week ago.
That makes sense because a large part of the forex market has been long USD since Trump won the US presidential elections. So, in the last two weeks, USD buyers have been squaring off trades for their yearend portfolio readjustment. Hence, the USD pullback in the last couple of weeks. Low liquidity has also played a part in this Christmas market.
But we must not be fooled by this holiday price action, guys. Forex traders who are new to this business have a tendency to get too dragged in by this sort of market, but don´t forget that this is not the real market. The real forex market is much more volatile so don´t get too used to these recent ranges which have been very tight.
Besides that, remember that the USD is the only currency to buy. You can´t trust the Pound since Brexit, you can't buy the Yen after the 18 cent USD/JPY rally, the commodity Dollars have all been beaten up despite the last few relaxing days, and EUR/USD is trading below a long term support level.
As a result, once all the players are back from holidays, they will get back where they left, which is to get long on the Buck again. In fact, the closer we get to the end of this Christmas period, the more rational the market will become which means that more money will pour into the USD.
The 50-70 pips decline in most USD pairs this morning tells the story; USD buyers are waiting behind the door to get in, so be extra careful if your´re selling the Buck.
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