Markets on Tuesday: The USD Breaks the Uptrend
The USD was again one of the key movers in overnight trade, although it was the strong rally in US equities that stole most of the limelight.
Through US trade, it was clearly the US-Mexico trade agreement that helped spark traders into action. The deal surely adds a sense of relief to markets who have been concerned about the fate of many of the emerging markets.
Equities rallied strongly, adding to the strong close we saw in Asia yesterday. The SPX was up 0.77% on the day and it was relatively lively trade considering it was a Monday.
Of the majors, the EUR/USD in particular has continued its strong run as it closes in on the 1.1700 handle. We spoke yesterday about how the 1.1750 level would provide some resistance.
It’s another quiet day on the economic calendar in which the main highlight will be consumer confidence out of the US.
The USD is Weak
The resistance level turned support at 95.00 is no more and we have finally pushed through the uptrend that has been in place since mid-June.
With that said, we still have room to turn this thing around. That level, in my opinion, is not broken until we well and truly clear it.
I still think we have a classic ‘buy the dip’ here, as we look to the further rate hikes this year in the US.
In particular, the EUR/USD is looking like a great sell opportunity at the 1.1750, ahead of a rebound in the Greenback.
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