The US Government’s Infighting is Dragging the Dollar Down

Trump signed the bill with the next package of sanctions against Russia, Iran, and North Korea. Basically, his decision was entirely logical if you ignore the fact that the bill limits Trump’s ability to lighten the sanctions. Of course, the President expressed concern that this might damage US interests in work with its allies. This is therefore another demonstration of the internal political struggle of the US government, which is an additional drag on the weakening dollar. Technically, the EUR/USD weekly charts displayed a confirmed triple bottom after a breakthrough at 1.1530. The medium-term target therefore might be 1.2510. The key term is “medium-term,” since the fact that the single European currency is clearly overbought should be compensated by a correction one way or another. In the euro rally, it is fairly intriguing to keep an eye on different specialists’ assessments of further prospects. One must note that there is no consensus among western bankers, although a large number of them are leaning toward a likely weakening of the pair in the second half of this year. That is, faith in the Fed and in the September meeting is persisting. The ADP Nonfarm number showed a decline in the number of non-farm jobs by 178,000 against a forecast of 185,000.

Apple's reports propped up the US market in Wednesday's trading. The yawning gap up on stocks that formed at the opening might likely be closed in the next few days, but the Dow Jones was testing its strength at 22,000. The bulls are strong, but we should not forget about unclosed gaps on the index’s daily charts on July 12, 2017, and July 26, 2017. Apple reported crossing the threshold of 1.2 billion iPhones sold; the forecast for 4th quarter earnings is from 49 to 52 billion dollars.

Today the BoE meeting will be of interest. They are not changing the rate, but Carney’s mood may be hawkish. It is therefore worth listening to the commentary that will follow the meeting at 11:30 am GMT. Meanwhile the situation with the GBP/USD pair is still favoring the bulls but, to be honest, this is due more to the dollar than to the British currency. If growth continues, the technical ceiling may be 1.3400.

The ruble sagged against the dollar, again taking off toward 61. This fact and the price of oil apparently helped prop up the stock market. The MICEX rose yesterday, as it did the two days before, so we cannot rule out a continuation of the bullish trend if the 1970 mark is overcome.

Nikolay Dudchenko, Olymp Trade

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