NEW YORK, N.Y. – The quiet trading session, with most of the markets being closed for the Christmas holiday break, has pushed the US dollar index towards a nasty move.
The price of the US dollar index edged lower by more than 100 pips, although it bounced back to trade mostly flat after two hours.
However, the US dollar index is again going towards a downward trend, and market players are looking towards some cash as it declines further.
So far today, the price of the US dollar currency index has retraced 61.8% of its previous spike, inching lower towards 96.97 points. If the decreasing momentum continues, the market is looking towards the index spiking even lower to around 96.59 for the day.
Previously, the US dollar has broken lower on the December 13 trading session, marking a value out of the ascending sloping channel where the currency price has been since the middle of 2018. the currency price then bounced to retest the bottom level of the trendline near the 97.70 200-day moving average. With the decline during this session, it opened the door wider to more declines, bringing the price to as low as 96.59 points and further away from the channel.
On Friday, the US dollar has continued to weaken following the optimism of the market towards the developments of the US-China trade deal, which lifted the risk appetite of most market players in the light trading session as the year ends.
According to analysts, the US dollar dropped against the increasing market risk-on sentiment as investors await on phase one signing of the trade deal between the US and China, which is scheduled for early next year.
But with the recent downtrend of the US dollar index has been optimistic for the dollar pairs, including GBP/USD and EUR/USD.
The GBP/USD pair was last seen trading with a 100 pips gain close to 1.3090 level and leaning towards another retest of the 38.2% Fibonacci retracement level from its previous spike after the election on December 12 towards the 1.3137 low on December 25. Should the pair continue to move upward, the next resistance level is at 50% of the retracement level, which is 1.3210 points.
The EUR/USD pair is also having a big day with the continued decline of the US dollar index. The pair was trading with some optimistic gains at around 75 pips close to 1.1170 points. It is also looking towards another retest of the December 13 record highs and the 61.8% Fibonacci retracement level since the highs on June 25 to the 1.1207 lows on October 1.