We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Bullish
Bitcoin
Bearish
More View more
Real Time News
  • RT @RedboxWire: China Commerce Ministry Official: Speeding Up Study Of New Fiscal, Tax, Financial, Insurance Measures To Further Support Co…
  • #AUDUSD #NZDUSD down with crude oil and S&P 500 futures after markets were infected with risk aversion following the announcement of South Korea reporting an additional 52 cases of the #coronavirus bringing the total to 156 and globally at 76,241. https://t.co/XvGar3l6fV
  • APAC markets tilt risk-off as S. Korea reports 52 more #coronavirus cases. Yields, #AUDUSD and #NZDUSD down. #JPY, #gold and #bonds higher
  • The $USD’s aggressive rise versus ASEAN currencies such as the Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit and Philippine Peso prolonged. What is the technical road ahead? Find out from @ddubrovskyFX here:https://t.co/RsFptNzODf https://t.co/agMwRLV0rZ
  • RT @YuanTalks: #China confirmed 889 new cases of #coronavirus, taking the total number of confirmed cases to 75,465 as of Thursday and the…
  • RT @Rover829: Reuters: CHINA REPORTS 889 NEW CONFIRMED CASES OF CORONAVIRUS ON MAINLAND ON FEB 20 VS 394 ON FEB 19 (this means more than ha…
  • RT @globaltimesnews: #Coronavirus halts most China-Europe freight trains until mid-February: industry insiders. https://t.co/L6gdcnQqIl htt…
  • RT @RANsquawk: Japanese Jibun Bank Flash PMIs (Feb): - Manufacturing 47.6 (Prev. 48.8) - Services 46.7 (Prev. 51.0) - Composite 47.0 (Prev.…
  • Bank of Japan's Governor Kuroda: Consumption drop isn't fault of sales tax alone. Storms, unseasonable weather also hitting spending. Capex, govt. policies supporting moderate expansion -BBG
  • South Korea confirms 52 further cases of the #coronavirus , bringing total to 156 -BBG
US Dollar May Rise on PCE Data and Trade War Optimism

US Dollar May Rise on PCE Data and Trade War Optimism

2019-12-20 08:00:00
Dimitri Zabelin, Junior Currency Analyst
Share:

Euro, US Dollar, EUR/USD – Talking Points

  • US Dollar could rise if Core PCE data reinforces Fed’s neutral position
  • Trade war optimism may continue to buoy market mood, cool easing bets
  • EUR/USD may trim recent gains as pair struggles to trade above 1.1121

US Dollar Outlook

The US Dollar may edge lower along with Treasuries if Core PCE data shows stronger-than-expected price growth for November. The final reading for quarter-on-quarter GDP data on an annualized basis is expected to remain unchanged at 2.1 percent, though PCE data will likely command more attention. However, sour US-China trade developments could curb some of the Greenback’s gains if it inflames Fed rate cut expectations.

US Economy Outlook

Year-on-year Core Personal Consumption Expenditure data is expected to show a 1.5 percent increase for November, slightly lower than the previous 1.6 percent print. Its quarter-on-quarter equivalent is expected to remain unchanged at 0.1 percent. This particular economic indicator carries an inordinate amount of weight in market attention due to it being Fed’s preferred measure of inflation.

Chart showing Core PCE

While one publication cannot by itself completely reverse monetary policy, continuous outperform could tilt Fed officials to become more hawkish. Mind you, Chairman Jerome Powell made it very clear at the last meeting that the Fed intends on remaining neutral unless downside risks become materially worse. Conversely, policymakers also said would only consider a hike if inflation remained persistently high.

US-China Trade War

US-China trade relations are still fundamentally unresolved, but the completion of the “phase 1” accord has lifted market sentiment and caused Treasuries yields to climb and cooled 2020 rate cut bets. While Beijing has expressed trepidation in the volume of agricultural purchases, it appears to have been largely ignored by markets. However, if a larger obstacles appear down the road, easing expectations may build at the expense of USD.

US 10-Year Government Bond Yield, Federal Funds Futures December-January 2020 Contracts

Chart showing US Government bond yields

US government bond yield chart created using TradingView

EUR/USD Technical Analysis

After briefly reaching above the 1.1182-1.1165 resistance range, EUR/USD quickly retreat and has struggled to climb higher. The pair is now hovering just on the cusp of 1.1121, though recent price action suggests upside resolve is waning. Looking ahead, the pair may retest 1.1091, which, if broken could open the door to support at 1.0989.

EUR/USD – Daily Chart

Chart showing EUR/USD

EUR/USD chart created using TradingView

US DOLLAR TRADING RESOURCES

Starts in:
Live now:
Feb 24
( 04:02 GMT )
Recommended by Dimitri Zabelin
Geopolitical Risks Affecting Markets in the Week Ahead
Register for webinar
Join now
Webinar has ended

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.