The US Dollar pulled back against the spectrum of major currencies as risk appetite surged on seemingly promising news from the G20 summit in London. However, a detailed look at the final communiqué suggests policymakers have actually offered little substance, reveling in lofty promises but committing to a relatively few tangible actions to deal with deepening global economic turmoil. Further, tomorrow’s US NFP report may crush risk appetite as traders are faced with the harsh reality of deep job losses and thereby continued sluggish spending in the world’s largest consumer market.
Technically, the US Dollar Index (an average of the greenback’s value against six top currencies) found near-term resistance at the 50% Fibonacci retracement of the 03/04-03/19 downswing and pulled back to support at the 23.6% level. This juncture is bolstered by the nearby presence of a rising trend line that has guided prices higher since the all-time bottom in mid-July of last year.
On balance, the current selloff looks corrective in the context of a larger uptrend, offering US traders another opportunity to position long as the long-term bullish trend regains momentum.
