The U.S. Dollar is trading sharply higher against a basket of currencies late Tuesday after President Donald Trump and U.S. lawmakers reached a two-year deal that raises the limits on government borrowing to cover spending.
The greenback was also supported by a report from the International Monetary Fund that raised its forecast on U.S. growth in 2019 to 2.6% while lowering its overall global growth outlook to 3.2% for this year.
Also contributing to the dollar’s strength was a steep drop in the Euro as investors prepared for news of fresh stimulus from the European Central Bank on July 25. Traders expect the ECB to issue dovish forward guidance and possibly more generous terms for its planned new multi-year loans. Money markets also indicated that the chances of a 10-basis point rate cut from the ECB had dropped to less than 40% from roughly 60% on Friday.
The dollar also traded higher against the British Pound after Boris Johnson won the prime minister election. Johnson has promised to lead Britain out of the European Union with or without a deal. This is known as a “hard exit”.
At 19:20 GMT, September U.S. Dollar Index futures are trading 97.400, up 0.425 or +0.44%.
Daily Technical Analysis
The main trend is up according to the daily swing chart. The trend turned up and was reaffirmed twice when buyers took out a series of main tops at 97.10, 97.195 and 97.265. If the upside momentum continues then we could see a test of the next two tops at 97.625 and 97.715.
On the downside, the nearest main bottom comes in at 96.320. A trade through this level will change the main trend to down.
The major retracement zone support is 96.205 to 95.850. Trading above this zone is helping to generate the strong upside bias.
Daily Technical Forecast
Based on the early price action and the current price at 97.400, the direction of the September U.S. Dollar Index the rest of the session is likely to be determined by trader reaction to the downtrending Gann angle at 97.380.
A sustained move over 97.380 will indicate the presence of buyers. If this continues to generate enough upside momentum then look for buyers to make a run at the June 30 main top at 97.625 and the May 23 main top at 97.715.
A sustained move under 97.380 will signal the presence of sellers. If traders decide to book profits then look for a potential move into the steep uptrending Gann angle at 97.070.
This article was originally posted on FX Empire
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