As it often happens the darkest time is observed before sunrise, and this is what happened in the market today, especially for those who opened positions against the dollar during the previous four trading days. Four trading days, traders discussed only one thing - USD dollar is strengthening on the weakness of other currencies, there are no real driver for dollar growth. Current USD dollar is not sustainable and does not have a fundamental nature. The dollar is weak - we have not seen significant statistics on the American economy for a long time; the latest data on US NON-FARM have long been played. Even global risk-off mode could not lead to such a strong USD dollar gains. USD dollar is technically overbought and so on and so on. Apparently, all this has led to a very unpleasant situation on a global scale, the trading practice known as “catching falling knives”. Very nervous trading approach and dangerous to the same.
So, if we put the lyrics aside. Today, British pound is in market spotlight again. It is interesting that USD growth started with British currency, and the weakening of the dollar also begins with the British currency. Bank of England left rates unchanged at 0.75%, as expected, by unanimous decision, despite rumors of hawks and dissenters.
The reason why the pound fell at the beginning of the meeting is that British regulator joined the Fed and other central banks, abandoning plans to raise interest rates. The regulator lowered its economic forecasts amid growing uncertainty about Brexit and the slowdown in global growth. This led to large-scale sales of the British currency.
However, shortly before Wall-Street start, the pound showed impressive growth and gained from 1.2850 to 1.2995. It is reported that the British currency has gained on reports that the risks of tough Brexit remain minimal. This was the reason for the formation of USD dollar pullback. US dollar index pulled away from the daily high 96.45, denoting the reversal formation on the four-hour chart. European currency marked lows in 1.1325 zone and moved to corrective growth. The closest resistance area for this market is 1.1355.