This morning’s price action provides more fuel to the thesis of a dollar top.
While the US Dollar Index (DYX) did end up marginally higher by the end of yesterday’s session, the index has stayed within the 106 - 106.7 range for the past three days.
Market indecision is demonstrated by the spinning top candlestick patterns formed on the daily chart; a third today would act as further confirmation of a rangebound dollar stuck at three-month lows.
Recent chat performance suggests indecisive DYX sentiment – Source: capital.com
Today’s UK unemployment data came in a tad higher than expected by edging up to 3.6% in the three months to September of 2022 from 3.5% in the previous period, with average earnings up 6% year on year- still way below an inflation rate that’s predicted to hit 10.5% in tomorrow’s reading.
GBP/USD is up more than 50 pips to US$1.18, with most gains added in the hour since the unemployment data release.
Can Cable extend past August highs? – Source: capital.com
EUR/GBP is changing hands at 87.8p, with the euro gaining the upper hand given the past three days of solid gains on the pair
Monday’s Euro Area industrial production reading came as a surprise, having advanced 4.9% from a year earlier in September 2022, easily beating the 3.3% forecast.
While that did little to stir momentum in the euro yesterday, the EUR/USD pair is definitely rallying today. Having added 0.6% so far, the pair has cleared a four-month high of US$1.038.
Euro area GDP figures due this morning are expected to be grim; we’ll see if that pours cold water on the euro’s bullish performance.