Global macro overview for 02/01/2018

Trading between the holidays could be burdened with shifts at the end of the month, quarter and year, but some decisions will be difficult to completely reverse. Above all, the US Dollar remains weak. President Trump signed the tax law and together with the signature, the whole spell connected with fiscal expansion (at least for now) was affected. The market prefers to sell facts, being aware, that success in this field may be difficult with the strongly divided Congress. After all, in December Trump mentioned the planned infrastructure expenses, but without revealing details, there is no factor that could help the dollar. On the monetary policy side, the Fed itself remains in doubt as to whether inflation recovery will ever come again, which may even freeze the standardization process by June. Subsequent data may naturally revive the discussion, but an extraordinary pay jump (January 5) or CPI (January 12) is required. The problem is that the beginning of the year is usually brought by the deterioration of US macro data, mainly in economic activity, and expectations are excessive after a good fourth quarter.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market is still in a downtrend as it approaches the important technical support at the level of 91.57. The market conditions are oversold, but there is still no sign of a bullish divergence yet. The nearest technical resistance is seen at the level of 92.49.


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