Justin Pugsley - Justin has over 20 years experience writing about markets, economics and finance. He has worked for a number of leading media organisations such as Agence France Presse (AFP), Dow Jones, Wall Street Journal, Thomson-Reuters, British Sky Broadcasting and McGrawHill.
Justin Pugsley
Justin has over 20 years experience writing about markets, economics and finance. He has worked for a number of leading media organisations such as Agence France Presse (AFP), Dow Jones, Wall Street Journal, Thomson-Reuters, British Sky Broadcasting and McGrawHill.
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Trump's Obamacare victory didn't do much for USD with good reason

US President Donald Trump finally bagged a big victory with the House of Representatives voting to replace Obamacare opening the prospect for big tax cuts to turbo-charge the US economy. However, there is still some way to go, which is probably one reason why USD didn’t rally hard on the news.

Indeed, it could be a while before the USD index (a basket of currencies versus USD) reverses its current downtrend. The index stood at 98.58 on Friday compared with this year’s high seen in early January of 103.81.

Repealing Obamacare must now get through the Senate, which will be harder because Democrats are better positioned and even have some Republican allies supporting their cause. That means negotiations could be tense, lengthy and may result in considerable compromises.

Trump's Obamacare victory didn't do much for USD with good reason

Repealing Obamacare must now get through the Senate, which will be harder because Democrats are better positioned and even have some Republican allies supporting their cause. That means negotiations could be tense, lengthy and may result in considerable compromises.

Trump’s tax reforms will probably face similar hurdles in the Senate and may in the end look a lot less attractive to investors and big business than the current proposals. They could also take time to get passed and may not in the end be enough to turbo charge US GDP growth to 3-4% and send US interest rates and USD soaring.

Nonetheless, and thanks in large part to the work of Paul Ryan the speaker of the House of Representatives, the Trump administration does seem to be starting to get the hang of Washington politics.

For the time being, USD moves might be dictated more by events abroad, such as national elections in the Eurozone.

 

TECHNICAL ANALYSIS: EUR/USD building base for next upwards assault

Last week EUR/USD managed to clear resistance levels bunched around 1.0930-1.0950 briefly registering a high of 1.1000. Though the move continues to confirm that a EUR/USD rally is still in place various technical indicators suggest progress could be slow and even suggest that another period of consolidation could be close.

The daily RSI has just crept into oversold territory of 70, which for EUR/USD has often signalled that a pull-back is not far off. Nonetheless, the pair have slipped back under the upper Bollinger band.

Resistance can be seen at 1.1027, 1.1057-60 and 1.1141. Support is placed at 1.0950,1.0898 and 1.0886.

 

By Justin Pugsley, Markets Analyst, MahiFX

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