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Feb 16, 2018

U.S DOLLAR INDEX SELL OFF EXTENDS OVER RISING INFLATION FEARS

GREENBACK SLUMPS

The U.S dollar index continued to sell-off this week, following another round of strong monthly inflation figures from the American economy. The greenback tumbled across the board, after the U.S Consumer Price Index rose 0.5 percent higher for the month of January, sparking fears that the Federal Reserve will be forced to raise interest rates quicker than expected. The U.S dollar index moved back towards the key 88.00 level, giving back the marginal trading gains seen from the previous trading week.

  • The U.S dollar index remains strongly bearish while trading below the 88.90 level, further downside towards 88.00 and 86.80 seems possible.

  • If the U.S dollar index can regain the 88.90 level, we may see further upside towards the 89.50 and 90.20 levels.

YEN STRENGTH

The Japanese yen currency made strong gains against the U.S dollar this week, as safe-haven demand and broad-based weakness in the greenback helped underpinned Yen strength. The local Japanese stock market also experienced a continuation of recent trading losses, with the Nikkie225 falling towards the 21,500 level. The USDJPY pair sunk to its lowest trading level since November 2016, hitting 105.50, as sellers pushed price-action below the five-month technical price support, located at 107.29.

  • The USDJPY pair remains strongly bearish while trading below the 107.29 level, further downside towards 105.00 and 104.70 appears likely.

  • Should price-action move above the 107.29 level, we may see a relief rally back towards 108.20 and 108.98 levels.

BITCOIN 10,000

The price of Bitcoin gradually recovered against the U.S dollar this week, with the BTCUSD cryptocurrency pair moving back towards the key $10,000 mark. Bitcoin moved to a two-week trading high against the greenback, as a combination of U.S dollar weakness and technical dip-buying helped overall BTCUSD demand. In the wider cryptocurrency market, Litecoin was the biggest gainer, gaining over twenty percent, while Ethereum and Ripple made solid double-digit gains for the week.

  • The BTCUSD pair remains bullish while trading above the $8,600 level, further upside towards $10,500 and $11,800 remains possible.

  • Should price-action on the BTCUSD pair fall below the $8,600 level, downside support is found at the $7,820 and $6,900 levels.

GOLD DEMAND

The price of spot gold moved higher this week, as investors continue to seek the safe-haven of the yellow metal, as demand for greenbacks remained weak. The value of spot gold rose towards the 2018 price-high, at $1,365, with gold buyers now edging ever closer to multi-year price-highs around the $1,375 level. The move higher in spot gold has largely been driven by U.S dollar weakness, although seasonal demand and strong technical buying have also been contributing factors to its recent rise.

  • Spot gold remains bullish while trading above the $1,332 level, further upside towards $1,375 and $1,400 seems possible.

  • Should price-action on spot gold decline below the $1,332 level, we may see a correction back towards the $1,321 and $1,312 support levels.

 

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