Dollar Surges, Bitcoin Gains on Trump’s Pro-Growth Stance
EUR/USD Finds Support at 1.0680; Bullish Divergence Hints at Rebound Potential
Last week’s Trump win helped both the dollar and Bitcoin and ignited hopes of a loose tax policy going forward. Now it remains to be seen how much of Trump’s campaign talk will translate into actual facts. He proposed business deregulation, sliced taxes, increased tariff charges, and strict measures against illegal immigration. Also, his pro-crypto stance played a big part and was a highlight of Trump’s campaign.
The US Dollar Index jumped from 103.45 to a high of 105.44 during Election Day. Wednesday, EUR/USD dropped to 1.0685 from a high of 1.0935, which is quite impressive for the pair considering that its daily range is much lower.
Economic Calendar Highlights
We have a slower week ahead, but it’s hard to top a week that included both a Presidential Election and a Fed Rate announcement.
U.S. banks will be closed on Monday in observance of Veterans Day and Tuesday’s only highlight is the release of the German ZEW Sentiment survey scheduled for 10:00 am GMT. A few FOMC members will deliver speeches later in the day.
Possibly the most important release of the week is scheduled for Wednesday at 1:30 pm GMT: the U.S. Consumer Price Index (CPI). Both the Core and the headline versions are expected to stay the same as last month but any surprises will likely have an impact on the charts.
Thursday’s highlight will be the U.S. Producer Price Index release, scheduled at 1:30 pm GMT. Later in the day, Fed Chair Powell will deliver a speech in Dallas.
The U.S. Retail Sales will come out Friday at 1:30 pm GMT and this will be the last notable release of the week. Sales made at retail levels are the main gauge of consumer spending, which in turn represents the biggest part of the entire country’s economic activity.
Technical Outlook – EUR/USD
The US Dollar is on the offensive, backed by Trump’s win. As mentioned earlier, the pair dropped more than 200 pips since the Election but it seems to have found support around 1.0680. This level pushed the price higher two times (Wednesday and Friday) and thus, it will be important going forward.
The RSI was oversold in late October and the pair bounced after failing to break 1.0775 support. The recent price action created a lower low, at 1.0685 but the RSI is not oversold and in fact, it has printed a higher low. This bullish divergence could make the case for a move north but maybe the political and economic landscape will take the lead and overshadow the technical aspect.
