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Recap: US Dollar gives up ahead Thanksgiving; pullback or profit taking?

FXStreet (San Francisco) - The Dollar traded lower on Wednesday against its major competitors as investors are possibly collecting profits and DXY is testing the 20-day MA level at 87.60 for first time in November.

The USD was also trading under pressure amid a string of poor economic data: Michigan consumer sentiment dropped to 88.8 in November, below expectations. Chicago PMI declined to 60.8 in November; deeper than 63.0 expected. The index lost all October improvement. New homes sales rose 0.7% to and annual rate of 458K; pending home sales declined 1.1% in October; but it increased 2.2% YoY.

As noted in a recent article, the USD has been trading negative for three days after peaking on Monday at 88.43 and now it is testing its 20-day MA level for the first time in November. The DXY is currently at 87.60 and a close below it will open the door for a test of the 50-day MA of 86.30, a level that has not been touched since July.

On the other hand, November is coming to an end, and according to Matt Weller from Forex.com, the November month-end model is signaling a potential USD weakness. "Overall, US markets saw the biggest inflows this month, creating a strong bearish signal on the US Dollar heading into the final trading day of the month on Friday."

Weller also clarified: "That said, the timing of the Thanksgiving holiday may prompt some US fund managers to rebalance a bit earlier on Wednesday." It was today.

So what's next? talking about the EUR/USD, inflows in the USD and cheaper DXY below its 20-day MA at 87.60 are sending a bearish signal in the short term. Is likely to send the pair to test its 50-day MA at 1.2650.

As a plus, a weak USD could fuel the gold to test its 50-day MA too around 1,208.00.

As summary, the EUR/USD rose for third day and completed a 165-pips return from 1.2350 low priced on Monday. The pair is closing the day at 1.2500 after peaking to 1.3530. The GBP/USD Jumped to tests the 1.5800 area but the cable was unable to break above it and is closing at 1.5890, positive for third day.

The USD/JPY remains inside its 100-pips range above 117.50 and no news for a bullish extension at least before December. In fact, according to Valeria Bednarik from FXStreet, "a price acceleration below the level is now required to confirm further slides, eyeing then the 116.65 area as probable bearish target, while shy selling interest may begin to surge on approaches to 118.00."

Key Data:

US MBA mortgage applications decline 4.3 percent

US durable goods orders stronger than expected in October

US personal income increases, but gains weaker than expected

US initial jobless claims increase to 313k

Chicago ISM manufacturing index declines led by weaker new orders

US pending home sales slow in October

US new home sales increase at slower rate than expectations

Michigan consumer sentiment index strengthens in November, but weaker than expectations

NZ shows trade deficit of $908 million in Oct

Wall Street closes at record highs; Nasdaq at 14-year highs

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