Talking Points:
- A stronger Chinese Yuan fix has helped ease concerns over an immediate response by China as trade tensions with the US rise once more.
- GBP/USD[1] remains pressured as traders eye another crucial Brexit vote in the House of Commons.
- Retail traders[2] have yet to abandon their bearish US Dollar outlook.
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The US Dollar (via DXY[4] Index) has failed to break through the weekly highs established yesterday, setting up the development of an inside day candlestick pattern. To little surprise, EUR/USD[5], as 57.6% of the DXY Index, is also carving out an inside day candlestick.
A quick recall of recent price action helps put these inside day bars in proper context. Inside days are typically viewed as pauses or potential turning points in trends, meaning that the US Dollar's recent bullish run - and the Euro's bearish slide - is entering a critical juncture.
DXY Index Price: Daily Timeframe (July 2017 to June 2018) (Chart 1)
The DXY Index continues to contend with 95.17 - the high from the July 20, 2017 bearish outside engulfing bar, as well as the October and November 2017 swing highs. But until a daily close through 95.17 is achieved, traders may be best suited to be a bit more patient approaching new long USD-pair trades; the inside day bar that is forming suggests that recent buy signals issued by MACD and Slow Stochastics may be 'false starts.'
Elsewhere, in light of a rather absent economic calendar for the third day in
