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Figure Heloc 
Fundamental
OverviewThe USD strengthened a bit
on Friday following some positive Trump’s comments on China as Treasury yields
bounced and erased the Thursday’s losses. Overall, the US dollar performance
has been mixed as markets have been driven by quick changes in risk sentiment
since Trump’s tariffs threat. On the domestic side, the
US government shutdown continues to delay many key US economic reports. The
dollar “repricing trade” needs strong US data to keep going, especially on the
labour market side, so any hiccup on that front is weighing on the greenback. The BLS will release the US
CPI report on Friday despite the shutdown, so that’s going to be a key risk
event. That will need to be seen in the context of US-China relations and any
negative shock by that time though. If things go south, then the CPI will not
matter much as growth fears will trump everything else. On the EUR side, the single
currency found support last week as the French political risk eased after
Lecornu survived the no-confidence vote. On the monetary policy side, nothing
has changed. The ECB is not expected to adjust rates for a long time unless we
get significant deviation from their inflation target. In fact, the vast
majority of ECB members is comfortable with the current rate setting and will
not respond to small or short-term deviations from their target barring a clear
shock in the economy.EURUSD Technical
Analysis – Daily TimeframeOn the daily chart, we can
see that EURUSD avoided a key downside breakout last week. The price eventually
bounced back and extended the rally into the 1.17 handle before pulling back. If
the pullback extends into the key support around the 1.1573 level, we can
expect the buyers to step in there with a defined risk below the support to
position for a rally into the 1.18 handle next. The sellers, on the other hand,
will want to see the price breaking lower to pile in for a drop into the 1.14
handle. EURUSD Technical
Analysis – 4 hour TimeframeOn the 4 hour chart, there’s
not much we can glean from this timeframe as the buyers will better off
stepping in around the support, while the sellers will look for a downside
breakout. EURUSD Technical
Analysis – 1 hour TimeframeOn the 1 hour chart, we can see that we have a minor downward trendline
defining the current pullback. If the price comes back into the trendline, we
can expect the sellers to lean on it with a defined risk above it to keep
pushing into new lows. The buyers, on the other hand, will look for a break
higher to pile in for a rally back into the 1.17 handle. The red lines define average daily range for today. Upcoming
CatalystsThe focus remains
on the US-China developments but on Friday we will also get the US CPI report, and the Eurozone and US Flash PMIs.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
The recent uptick in the USD, spurred by Trump’s comments on China and a rebound in Treasury yields, highlights a crucial moment for traders. The mixed performance of the dollar suggests that market sentiment is highly reactive to geopolitical developments, which can create volatility. Traders should be cautious; the current environment is reminiscent of past trade tensions where knee-jerk reactions led to rapid reversals. For those in forex, the USD’s strength could impact pairs like EUR/USD and GBP/USD, especially if the dollar continues to gain traction. Watch the 1.05 level on the EUR/USD for potential support or resistance, as a break could signal a stronger dollar trend. Additionally, keep an eye on the 10-year Treasury yield; if it holds above 4%, it might reinforce the dollar’s position. The real story here is the uncertainty surrounding trade policies and their ripple effects on global markets. If the sentiment shifts again, we could see significant moves in commodities and equities as well. Traders should monitor upcoming economic data releases and geopolitical news closely, as these will likely dictate the next moves in the forex market.
📮 Takeaway
Keep a close watch on the USD’s performance against key pairs and Treasury yields, as geopolitical shifts could trigger significant volatility in the coming days.
