Forex Today: Dollar’s advance may be short-lived

FXStreet Team FXStreet

Here is what you need to know on Monday, December 28:

A post-Brexit agreement was finally reached on Christmas Eve. During the weekend, the EU and the UK published the full text of their post-Brexit arrangement, which includes details on trade, law enforcement and dispute settlement among other things.

The accord needs to be ratified by the respective parliaments. On fisheries, the most controversial issue, both parts agreed on a five-and-a-half-year transition period, in which EU fishing vessels will still have full access to UK waters, with a 25% cut gradually imposed to its fishing quota.

A Christmas shortened week will be followed by the Year-End holidays. Action is expected to remain subdued. Although financial markets could be altered by headlines related to the US stimulus/funding bill, as President Donald Trump didn’t sign it.

The dollar got to recover to some ground last Thursday, but the advance seems corrective. The greenback remains the weakest, with most major rivals holding near this year’s high against the American currency.

Coronavirus immunization is slowly starting worldwide. Europe has kick-started vaccination on Sunday. The good news may maintain markets in a risk-on mood.

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FXStreet Team

FXStreet

EUR/USD trims gains, hovers around 1.1900 post-US data

EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.

GBP/USD comes under pressure near 1.3680

The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.

Gold loses some traction, still above $5,000

Gold faces some selling pressure on Tuesday, surrendering part of its recent two-day advance although managing to keep the trade above the $5,000 mark per troy ounce. The daily pullback in the precious metal comes in response to the modest rebound in the US Dollar, while declining US Treasury yields across the curve seem to limit the downside.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.