US Dollar Index Capped by 84.50, Neutral Bias Ahead of a Quiet News Monday | IFCM
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US Dollar Index Capped by 84.50, Neutral Bias Ahead of a Quiet News Monday - 8.7.2013

Following surprisingly stronger than expected Non-Farm Payrolls on Friday, the greenback was on the uprising against its most counterparties. Firstly due to improved labor sector that has consequential effects on consumption and growth and secondly due to increasing chances of reducing asset purchases pace currently at $85 bln per month. The US dollar index rose as high as 84.56 from 83.89 minutes before the release. Technically we observe an uptrend that is limited by major resistance at 84.50 together with absence of economic events until FOMC Meeting Minutes on Wednesday, we consider more probable some correction attitude in the intraday in the form of either sideways or a modest pull back.


Elsewhere, the Euro dropped to more than a month low at 1.2805 against the US dollar, with tight range between 1.2842/1.2805 indicating neutral bias, likely to hold in the intraday ahead of the Eurogroup meeting and later on Draghi's speech at ECON Committee of the European Parliament, comments on monetary policy could shake the EURUSD. We also saw the USDJPY on last day of previous week advancing to cap at 101.52 again to a more than month high with a technical correction earlier today to around 101 being technically necessary. The latter, was mainly due to dollar strength but also as US labor sector improves, traders risk sentiment improves and JPY weakens, because it is considered a safe currency.


Lastly, the previous week ECB and BOE sounded willing to hold accommodative policies for sometime and at the same time FED chances of tapering asset purchases are increasing, that underpins US dollar’s uptrend against the Euro and the Pound to carry on.
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