Dollar index has potential to rise
The USDX has growth potential, and buyers have a desire to return to the area of 91.00-91.20. It is also important to take into account the fact that today in the United States a bank holiday in connection with the celebration of the birthday of Martin Luther King. Therefore, USDX trading activity may fall. There will also be no important macroeconomic publications that can have a strong impact during the European session. With all this in mind, I expect market volatility to decline.
A splash of commercial activity can only occur in the event of an unexpected political conflict in the United States or other important geopolitical circumstances and force majeure. At the moment, a bullish scenario remains a priority.
The overall strengthening of the USD puts pressure on the pair, thereby contributing to a stronger wave of declines. I note that the sellers managed to enter the accumulation area 1.2045-1.2100. However, in order to further weaken the pair’s quotations, a fairly strong, bearish fundamental factor for the euro is needed. As the euro area will not publish important macroeconomic reports today, trade volatility may remain moderate. The bearish scenario remains a priority to return and subsequently fix the pair’s quotes above 1.2100.
After a third attempt by buyers to beat at 1.3700, seller activity increased significantly. At the time of writing, the pair were testing support at 1.3550. At the same time, there is a risk of a stronger wave of declines and, as a result, the return of quotations to the region of 1.3460/80.
Further weakening of the pair’s quotations may increase in the case of additional downward fundamentals for the GBP. Let me remind you that the situation in the UK with COVID-19 remains extremely volatile, while the consequences of Brexit continue to increase, which is negative for the GBP and the couple.
Volatility in this currency pair remains moderate and trading remains at 103.70 – previously a strong level of technical support. As a result, we see a consolidation of steam, indicating clear market uncertainty. Therefore, at the moment there are no high-quality trading signals.