Today we will be monitoring levels of support and resistance in unison with any impactful news and the underlying fundamentals in order to find a high probability trade. Support and resistance includes previous highs and lows (horizontal s/r), trendlines, moving averages, Fibonacci retracements, daily pivot levels and round numbers. These levels of support and resistance are most effective when there are several of them converging at the same area (confluence).
The dollar struggled to regain its footing on Tuesday, drooping against a basket of currencies after a sharp drop against the euro on solid German data and higher Bund yields. The dollar index, which tracks the greenback against a basket of six major rivals, fell 0.2 percent to 95.072.
The dollar was steady on the day at 124.53 yen, after pulling back from its 13-year high of 125.86 yen touched on Friday after unexpectedly strong U.S. job growth led to increased bets that the U.S. Federal Reserve was on course to raise interest rates before year-end. Wall Street’s top banks now expect the Fed to begin hiking rates in September, followed by another hike before year-end, a Reuters poll showed. Japanese Economics Minister Akira Amari said on Tuesday it was up to financial markets to decide whether currencies were moving in line with economic fundamentals. On Monday, President Barack Obama denied a report that quoted him as saying the strong dollar was “a problem” during conversation at the Group of Seven (G7) summit in Germany, stating that he makes it “a practice of not commenting on the daily fluctuations of the dollar or any other currency.” But some investors had used his remarks as an opportunity to pare long dollar positions, and the dollar couldn’t make much ground even though his denial put a floor under the U.S. unit. “Some thought there was probably some truth in whatever he first said,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo. “From a political standpoint, the downside of a strong dollar is likely unwelcome, and therefore markets are sensitive to comments like this,” she said.
The euro was buying $1.1315, up about 0.2 percent on the day after rising as high as $1.1343, topping its overnight peak scaled after better-than-expected German industrial output figures. Greece’s ongoing talks to wrangle an agreement with its lenders continued to make investors wary, and would likely cap the common currency’s rise. Greek officials met on Monday with EU Economics Commissioner Pierre Moscovici on what reforms Greece must implement to get new loans, but there was no new proposal from Athens to which its creditors could agree to, an EU official said. “Greek officials continue to reject the EU/IMF proposal so clearly no meaningful progress is being made which should have been negative for the currency and yet euro traded sharply higher,” Kathy Lien wrote. “We believe that selling euros on the 1.13 handle is an attractive opportunity,” she said. Greece can have only a minor influence on the euro, because of the country’s small size and the euro zone’s reforms, European Central Bank governing council member Christian Noyer said on Monday. “Greece represents 2 percent of the euro zone economy so it’s really marginal”.
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Source:: USD Update – Forex Trading Tips