Will Dollar Weakness Persist?

• 3 Jan 2018

USD/JPY

Today’s headline event the ISM Manufacturing PMI, is the first metric ahead of the NFP later this week, which will give an insight into the current employment situation in the U.S. The dollar has been weak against its major peers recently and the forecast for today’s PMI data is set to fall flat with a marginal decline in the sector.  The USD/JPY pair reflects the dollar weakness and a doji candle in today’s session highlights relative indecision from the market. Further weakness could see the pair approaching the 111.78 support level.

Impact event: ISM Manufacturing PMI data will be released at 17:00 GMT+2 and will impact dollar pairs.

GBP/USD

The Pound has climbed on the back of dollar weakness with the GBP/USD pair reaching a previous market top at the 1.361 price level. Momentum indicators look positive with volume rising into the uptrend. However, breaks of the upper Bollinger band indicate overbought conditions which is further confirmed by RSI topping the 70 resistance line.

USD/CAD

The Canadian dollar has also dominated against the U.S. Dollar and the USD/CAD pair are heading towards market lows last seen in October. MACD has also broken the zero line in support of the bearish trend. However, RSI is touching the 30 support level and there have been consecutive breaks of the lower Bollinger band. Today’s result from the ISM Manufacturing survey may impact near-term direction for the pair.

GOLD

Gold appears to be reversing after a sustained bullish run since the beginning of December. However, a bearish candle at the top of the bull run and a reversal on RSI could signal the end of the recent trend. Fundamental factors later in the day may influence whether the reversal is realized sooner or later.