US DOLLAR FIRM ON TAX PLAN OPTIMISM
The US dollar received a boost thanks to increased optimism on Congress getting closer to passing the planned tax cuts. The US house of representatives are expected to vote on tax reforms on Tuesday and the Senate later in the week. If approved, Donald Trump should make it law by Christmas and that will make a nice present for US dollar bulls.
Later today, important Eurozone economic data are due out. Around 10:00 GMT the Eurozone final annualised consumer price index will be released. The inflation figure is expected to maintain the same growth as the previous figure of 1.5%. The final year on year Core CPI, which strips out the more volatile prices like food and energy, is also expected to come in at 0.9% which is in line with the previously announced figure of 0.9%.
What is otherwise a relatively quiet economic news day, we have at 11:00 GMT, the UK's industrial orders due for release with a forecast of 14 - previously it came out at 17. At 13:00 GMT Canada's international securities purchases report is due is which was previously 16.81 Billion. This may spell some volatility for the CAD which is closely linked to this indicator of foreign investor sentiment for both the Canadian economy and its dollar.
The EUR/USD is under pressure and expected to continue its downside movement. The pair is capped by the descending 20-period moving average, which has crossed the 50-day moving average. The relative strength index is also moving below the neutrality level. 1.1812 (yesterday's high) is playing a major resistance role. As far as the price remains below the resistance level, expect a downward movement at 1.1717 (last week’s low) and 1.1670.
The USD/CAD is expected to continue its upside movement. The pair accelerated on the upside and broke above its key resistance at 1.2815, which is a key support now. The 20- period moving average crossed above the 50- period moving average. The relative strength index is also bullish. To sum up, above 1.2815 look for new targets at 1.2893 (Friday's high) and 1.2909 (last month's high).
The GBP/USD is under pressure and expected to continue the downside movement. The downside move is further accelerated by the declining 20 day and 50 day moving averages. The relative strength index is bearish and calls for a further decline. As long as 1.3350 is the resistance look for further drops towards 1.33016 (Friday's low) and 1.3265.