Dollar bulls back in action as Gold dips

The dollar jumped to a fresh weekly high against a basket of major currencies on Tuesday amid market optimism over the US federal reserve raising interest rates at least twice in 2018.

There is a suspicion that dollar bullish investors are starting to look beyond December’s disappointing NFP headline figures, and have their sights set on wage growth which held steady at 2.5% to support the dollar Index.

With the economic calendar fairly light today and no real changes to the Greenback’s fundamental drivers overnight, price action is likely to dictate where the dollar index trades.

From a technical standpoint, the Index remains under pressure on the daily charts. Bears may exploit the current technical bounce towards the 92.80 region, to drive prices lower back to 92.00. Alternatively, a decisive breakout above 93.00 invalidates the current bearish setup, with the next level of interest at 93.40.

Euro tumbles to fresh one-week lows

The Euro extended losses against a strengthening Dollar during Tuesday’s trading session, with prices dipping to a fresh weekly low at 1.1920 as of writing.

Although further downside could be on the cards for the EURUSD if the Dollar continues to strengthen, losses are likely to be cushioned by the mighty Euro.

With Europe’s improving economic conditions supporting the Euro and the outlook for the Dollar still somewhat shaky amid low inflation concerns in the States, the EURUSD remains fundamentally bullish.

Taking a look at the technical picture, the EURUSD may be in the process of creating a new higher low, with the 1.1920 acting as the first line of defence for bulls.

If 1.1920 is breached, then the EURUSD bulls have a final opportunity to elevate prices higher around the pivotal 1.1850 level. A situation where bulls lose control above 1.1850, threatens the current bullish setup consequently inviting bears back into the game.

Currency spotlight – GBPUSD

Sterling bears lingered in the vicinity on Tuesday as the GBPUSD dipped towards the 1.3520 level.

With fundamental drivers behind Sterling’s erratic price action revolving around Brexit developments and political risk, the currency’s outlook continues to look murky.

Focusing on the technical outlook, traders will continue to observe how the GBPUSD reacts around 1.3520. A breakdown followed by sustained weakness below this level, may encourage a decline towards 1.3440.

Gold prices ease as Dollar strengthens

Gold found itself under pressure during Tuesday’s trading, amid renewed market expectations of higher US interest rates this year.

A strengthening dollar contributed to the yellow’s downside with prices currently trading around $1315.77 as of writing.

Although Gold may witness further losses in the short term amid US rate hike expectations, the yellow still remains bullish on the daily charts above $1300.

A weekly close above $1320 could signal further upside with $1333 acting as the next level of interest.