FX Daily Wrap Up

The US Dollar looks to have made both a technical and fundamental change against the world’s majors. Today the EUR/USD rallied up to new resistance at 1.3200 before swinging a 70-pip move towards new support near 1.2930. The million dollar question is whether the Dollar will remain below the mental block of 1.3200. If it does, most expect to see a bullish Dollar moving into and out of the tax season. On the other hand, if it doesn’t, many traders would expect to see range-bound trading hovering and testing defined support and resistance numbers. The main reason for a shift is the release of the Commerce Department’s measure of the trade deficit. Dollar bulls saw the balance of $58.2 billion deficit compared to the $58.8 figure in October, which is the smallest net outflow since July of 2005. A closer look at the different categories made the news even brighter. Total imports over November grew only 0.3 percent to $183 billion, as the crude bill shrank to $21.5 billion, the smallest since 2005. The biggest news was that exports reached a record growth of 0.9 percent to $124.8 billion. Encouraged by a drop in the Dollar and strong European-region growth, the increase in shipments abroad was seen in many of the key industry groups. Last but not least was a positive gain in the trade deficit with China. From a record $24.4 in October, the $22.9 balance should ease many of the harsh trade restrictions imposed by Washington on commodities from China. The EUR/USD is currently trading at 1.2934 heading into the Asian trading sessions. XPRESSTRADE Analyst David Hilgeman