EUR/USD turns flat above 1.20 as DXY retraces losses
After renewing its highest level since early January of 2015 at 1.2090 in the early European session, the EUR/USD pair started to erase its earning and recently turned flat on the day. As of writing, the pair was up 10 pips at 1.2032.
The majority of the US House agreed on a $15 billion in hurricane disaster aid and raising the debt limit to fund the government through December 8. US Treasury yields reacted positively to this development with the 10-year reference retracing its early losses and turn positive on the day, allowing the greenback to stage a rebound. The fact that all the Democrats voted in favor of the legislation was seen as the first significant victory for US President Donald Trump.
On the other hand, during his interview with the CNBC, New York Fed President William Dudley noted that the Fed would continue to tighten policy as times passes. Moreover, he argued that hurricanes would impact the economic data negatively but then would boost the growth.
- Fed’s Dudley: As time passes Fed will continue to tighten policy
Today's data from the U.S. revealed that sales of merchant wholesalers in July on a monthly basis contracted 0.1% to $465.1 billion, but was largely ignored by investors. The last data of the week will be the consumer credit change, which is expected to advance to $15.1 billion from $12.4 billion.At the moment, the US Dollar Index is at 91.35, still down 0.15% on the day.
- US: Inventories of wholesalers were $602.4 billion at the end of July, up 0.6% from June
Technical outlook
The pair could face the first hurdle at 1.2090/1.2100 (daily high/psychological level), 1.2170 (Dec. 31, 2014, high) and 1.2245 (Dec. 13, 2014, high). On the downside, a decisive break below 1.2000 (psychological level) could open the door towards 1.1945 (Aug. 29 low) and 1.1875 (20-DMA). The RSI indicator on the daily graph is above the 70 mark, suggesting that the pair could have a difficult time extending its gains before making a technical correction.