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FOREX PRO WEEKLY, December 18-22, 2017

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Dec 16, 2017.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    (Reuters) - The U.S. dollar rose on Friday as Republican negotiators in the U.S. Congress put the finishing touches on a sweeping tax overhaul, raising expectations that the bill would be passed by year-end.

    Representative Kevin Brady, chairman of the tax-writing House Ways and Means Committee, told reporters that Republicans on the House-Senate negotiating committee working on the revamped bill had signed the finished product and the details would be published when the full House convenes at 5:30 p.m. EST (2230 GMT).

    It comes after two Republicans sought changes to the proposed legislation.

    “People will be eyeing up the U.S. tax plan. There are expectations building they could have it done by next week, if not that pushes if off until next year,” said Mark McCormick, North American head of foreign exchange strategy at TD Securities in Toronto.

    The tax bill needs a simple majority to pass in the Senate, in which Republicans hold just 52 of the 100 seats, and no Democrats are expected to support it.

    The dollar index against a basket of six major currencies rose 0.49 percent to 93.944.

    Many investors expect that the tax overhaul may boost U.S. growth, leading to more interest rate hikes and a higher dollar.

    Tax legislation is seen as the last major event this year as investors wind down trading activity before the Christmas and New Year holidays.

    “Markets are really consolidating at this point into holiday trading,” McCormick said.

    The cost for banks to borrow short-term dollar funds from other banks, meanwhile, surged to its highest level since 2012 as financial institutions scrambled to secure funding before thinning trading volumes.

    The cross currency basis swap “is moving in the U.S. direction as people seek funding to cover them through the end of the year,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

    The three-month euro-dollar cross currency basis swap, which measures the premium banks have to pay to swap euros into dollars, traded at 100 basis points. It has widened from under minus 52 basis points at the beginning of the month.

    The rising swap cost was not yet seen impacting the greenback, though it could be negative for the dollar, said Chandler.

    “It’s very expensive for Europeans, say financial institutions, to buy Treasuries ... so it’s going to deter people from buying Treasuries and its going to encourage dollar-based investors to invest overseas,” Chandler said.

    News in Charts: Euro area ESIs Shrug off Political Uncertainty
    by Fathom Consulting

    Fathom’s latest Economic Sentiment Indicator (ESI) for the euro area remained unchanged at 1.3% in November, suggesting that the currency bloc’s economic recovery continued into the fourth quarter. Moreover, the country-level indices continue to indicate that the cyclical upswing remains broad-based, across both the core and peripheral economies.


    The German economy has thus far maintained its rapid growth trajectory in 2017 and the ESI suggests that this continued in November, despite Chancellor Angela Merkel’s failure to agree a coalition government. Crucially, however, much of the survey data was collected prior to the collapse of the coalition talks and so may not fully reflect the impact on business sentiment.


    The Fathom ESI for France rose from 0.8% in October to 0.9% in November, predominantly driven by strength in both the manufacturing and services PMIs. The consumer confidence index also rebounded in November, increasing by two index points to 102.4. Consumer optimism peaked following President Macron’s election, but had since been in decline. Such a trend is not uncommon following the country’s national elections, and does not appear to have had an impact on consumer spending, which grew by 0.6% in the third quarter.


    Italy’s ESI continues to outperform the country’s hard economic data and is hovering around all-time highs. However, elections must be held before the end of May 2018 and have the potential to spark fresh waves of volatility, with a reversal in economic sentiment a strong possibility. Even without political uncertainty, Italy’s recovery remains fragile with numerous headwinds including the profligacy of non-performing loans threatening to destabilize economic growth.


    The ongoing constitutional crisis in Catalonia is yet to have a meaningful impact on Spain’s ESI, with the indicator unchanged in November at 1.6%. Spanish gross domestic product is now forecast to grow in excess of 3% for a third consecutive year, with the economy’s output gap closing rapidly from its estimated peak in excess of 7% just four years ago.


    The relatively muted impact of the Catalonia crisis is somewhat surprising, given the area’s importance to the national economy – the autonomous region contributes 19% of national GVA, despite only accounting for 16% of the total population. Regional elections have been scheduled for 21 December with the outcome far from certain. A strong performance by the pro-independence parties could lead to a prolonged period of uncertainty which would weigh more heavily on economic growth.


    Our UK Economic Sentiment Indicator, which distils information from numerous consumer and business surveys into one gauge of underlying economic activity, held steady at 0.6% in November.
    Waning consumer confidence was offset by improving business sentiment, although firms continued to cite Brexit-related uncertainty and its impact on the economy as an issue. The November reading of GfK’s Consumer Sentiment Index slipped to -12, the same level as that seen after both the Brexit vote and this year’s general election.

    Another measure, which is collated but not used in the overall GfK Index, assesses households’ propensity to save. Having swung from -11 to 8 over the past year, this implies that an increasing number (the highest in nine years) feel that now is a good time to save.

    The danger is that with economic growth already subdued, and wages failing to keep pace with the rising cost of living, a further pickup in precautionary saving could tip the economy into recession. Already, the majority of people do not think that now is the right time to make major purchases.

    COT Report

    EUR CFTC data shows that net speculative position has hit absolute historical value around 113 K contracts. This jump is accompanied by open interest growth and shows that sentiment stands bullish. At the same time, on EUR/USD chart we do not see any significant price appreciation yet.
    Extreme values of speculative position makes us to be cautious on perspective of immediate upside trade continuation. Despite strong bullish sentiment a lot of money already was put in longs and fewer and fewer money that potentially could be put in this trend. At some moment this disbalance will become crucial and trigger reversal of different strength.
    At the same time, market could relatively freely fluctuate under recent 1.21 top without any significant pressure.
    So, CFTC analysis confirms bullish sentiment on EUR but makes us be prepared to some pause in upside trend in way of some consolidation maybe, as market needs to make re-adjustments in investors' portfolios. May be this will happen automatically due end of financial year.



    On monthly chart we do not have big changes by far. Combination of technical 1.2175 resistance and sentiment overbought makes EUR stands in tight consolidation after rectangle breakout in July.
    This is what we particularly mean above - EUR has no fuel to rise higher but bullish sentiment doesn't let it drop either. Probably market will spend time inside this small flag until equilibrium will be broken.

    Large monthly rectangle still stands as a core of analysis here among with all-time support/resistance zone that cuts EUR/USD history by 1.20 edge and upside reversal swing.

    In case of drop back in rectangle space - it will become open for price fluctuation and now it is impossible to say whether it will be deep retracement or real return back to lows.

    But right now it is not the fact that this definitely will happen. Fundamental picture becomes more uncertain. While Fed tightening policy stands on surface - recent statement brought concern on weak inflation, while recent Fathom report shows strong positive shifts in EU economy.
    It seems that 1-2 rate hike by Fed already are priced-in, not totally maybe, but 50-60%, I suppose. This could make any positive sign from EU works stronger and bring more support to EUR.

    It seems, that till the end of the year EUR probably will spend in 1.16-1.21 flag and this will be our primary object for today's analysis.


    This chart totally breaks previous setup. On Friday we've got turning moment in previous analysis - EUR has closed below 3x3 DMA. It means that we haven't got DRPO "Sell" that we've counted on. This moment changes overall situation drastically.

    Because, DRPO is not just a pattern, this is direction. What does it mean that market has not formed strong bearish reversal pattern, that potentially should lead to strong collapse been fulfilled by aggressive Fed policy? It could mean that Fed policy will be not as aggressive as it was suggested by investors. It also could mean that long-term sentiment is changing on market and investors now are watching in EUR side. It also could mean some disappointment in USD perspectives.

    From technical point of view, it significantly increases chances on appearing of bullish patterns. My experience tells when DRPO develops in this manner - most probable pattern is upside triangle which later could shift to butterfly.

    But, also it could "222" Buy as I've drawn on this chart. Which pattern will be formed now mostly will depend on depth of current downside action. Standing above 1.1550 increases chances on triangle while drop below it will turn situation into "222" Pattern...


    While "222" turning point still stands rather far - let's focus on triangle here. This is second possible setup (or better to say first) and it is more often happens when DRPO fails.

    Currently guys, the only one thing makes sense here. This is 1.1717 lows. And this will be the point that determines everything. So, we even do not need any other tools on this chart.

    Here we have two opposite patterns. They are look even more clear on dollar index. We have large reverse H&S and smaller direct H&S, which, in fact the right shoulder of bigger pattern.

    By market mechanics right shoulder of reverse pattern already has been formed and rally in the beginning of the week should become an extension stage of the market, lead price right to 1.21 area. Now we see some pause and downside reversal which looks like worrying sign. If this downside action will continue and market will break 1.1717 lows - this will break normal price behavior.

    In this case minor direct H&S will start to work. Personally I think that precisely this will happen. DRPO story already is finished and triangle already stands in progress.



    Here guys, another reason why we think, that it would be better to wait for breakout of 1.17 area. Although we have clear H&S and if it will work - we will get AB=CD that should lead us directly to daily triangle's border.

    But right now, we have potentially "222" Buy pattern on the slope of H&S pattern. Chances that it will wait are significant, but we do not know it definitely. What if it will not? What if it will work and EUR will start upside action based on reverse H&S pattern? Chances are small but they are above zero, right?

    Besides, whatever action will happen - either immediate upside action or initial drop to 1.16 triangle line and upside action after that - it will not change overall bullish scenario. It just brings different ways of the same type of action.

    That's being said standing above 1.1717 lows first and moving above 1.1850 second - will mean direct upside continuation, while breaking 1.1717 lows will lead EUR to 1.16 support area, where upside reversal should follow. That's scenario that we will be watching on next week.


    EUR starts to show signs of changing in long-term market's sentiment. Mostly these changes shift advantage in favor of EUR as EU economy shows very good recovery pace while Fed shows not as hawkish assessment of US economy as investors suggest.

    As a result, price is coiling in wide triangle consolidation that cancels potential DRPO "Sell" pattern which we've expected previous to be formed. Despite that we have two possible scenarios of price behavior inside triangle - both of them are bullish and major difference stands only about a moment when upside action will start.

    The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
    Joh, Kleinerbroker, RahmanSL and 6 others like this.
  2. shahsavari

    shahsavari Private, 1st Class

    Feb 9, 2012
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    Thanks a lot
    Sive Morten likes this.
  3. RahmanSL

    RahmanSL Major

    Jan 16, 2010
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    As always Sive, your time and analysis are very much appreciated :)

    Fundamentally, your conclusion: "EUR starts to show signs of changing in long-term market's sentiment. Mostly these changes shift advantage in favor of EUR as EU economy shows very good recovery pace while Fed shows not as hawkish assessment of US economy as investors suggest." is sound analysis.
    However, your earlier observation: "...The cost for banks to borrow short-term dollar funds from other banks, meanwhile, surged to its highest level since 2012 as financial institutions scrambled to secure funding before thinning trading volumes.
    The cross currency basis swap “is moving in the U.S. direction as people seek funding to cover them through the end of the year,..." will probably be the reason for, I suspect, rise of EUR/USD as 2017 draws to a close and through the holidays.

    All the very best and Merry X'mas to you & your family and to all those who celebrate this holiday :)AsstModerator
    ...and, of course, not forgetting our hardworking and diligent AsstModerator and his staff too :)

    P/S: After all these years, shouldn't that be full "Moderator" by now?? ;)
    Sive Morten and Kleinerbroker like this.
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Good morning,

    (Reuters) - The dollar remained mired in its recent ranges in subdued trade on Tuesday, as optimism that the U.S. tax reform bill would pass dueled with doubts about its ultimate effect on the economy.

    The dollar index, which tracks the U.S. currency against a basket of six major rivals, was steady on the day at 93.673.

    “With liquidity this low, it’s like throwing darts in the dark,” said Bart Wakabayashi, branch manager for State Street Bank in Tokyo, to explain the relatively thin market activity.

    “It’s relatively early in the holiday season for these kinds of market conditions, but dollar demand is there,” he said.

    The Republican-controlled U.S. Congress appeared all but certain to pass sweeping tax legislation this week after two Senate Republican holdouts agreed on Monday to support a tax overhaul backed by President Donald Trump.

    The House of Representatives, which is also expected to adopt the bill, was due to vote first at around 1:30 p.m. (1830 GMT) on Tuesday, Republican aides said. The Senate vote is expected to follow either later on Tuesday or on Wednesday.

    Rising hopes of the bill’s passage helped push U.S. stocks to record highs on Monday.

    “We expect the bill to pass, as do many market participants, and it seems to make the equity investors happy,” said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.

    “This week and next week, with so many investors leaving for the holidays already, and last week’s Fed meeting out of the way, we are expecting range-bound trade for a while,” he added.

    While Fed policymakers expect the U.S. economy to get a short-term lift from the tax reform, they project growth will then ease back to about 2 percent by 2020 and not rise to around 3 percent as Trump and his administration predict.

    The dollar edged up 0.1 percent to 112.63 yen, drifting in a range between its high of 113.750 hit a week ago and Friday's low of 112.035.

    Following last week’s Federal Reserve interest rate hike, Wall Street’s top banks expect the central bank to raise U.S. interest rates three times in 2018, matching the number of rate hikes this year and the Fed’s own outlook, as policymakers turned more upbeat on economic growth and the jobs market despite cool inflation.

    But Minneapolis Fed President Neel Kashkari said on Monday he voted against the Fed’s decision to raise interest rates last week over worries of weak inflation and a flattening of the U.S. Treasury yield curve.

    The euro edged up slightly to $1.1789.

    Bitcoin was up 0.2 percent at $18,952.51 on the Luxembourg-based Bitstamp exchange, below its record high of $19,666 hit on Sunday.

    The Australian dollar edged up 0.1 percent to $0.7666, within sight of six-week highs touched last week, as the country's central bank expressed greater confidence about the economic outlook.

    Minutes from the Reserve Bank of Australia’s (RBA) December meeting released on Tuesday showed policymakers were encouraged by a spate of improving economic data, though weakness in consumer spending was still a “significant risk.”

    So, guys, in weekend we've spoken on EUR - now let's take a look from a bit different angle by watching at Dollar Index (DXY). But first, now we need to aknowledge that market stands in very choppy stage - liquidity is thin, a lot of speculation around tax bill pass today. So, be ready for surprises. In general, pre-Christmas period is difficult for trading...

    So, on daily chart we have the same uncertainty around direction that is based on two contradictive patterns. Both of them H&S but they stand in opposite direction. The intrigue stands around 94.20 and 93.25 levels. If one of them will be broken - one of the patterns will fail, because both of them indicates the top of right shoulder:

    Here is 4-hour chart that could shed some light on this concern. First - we've got "222" Sell pattern right inside of right shoulder of potentially bullish H&S. Besides, both drops, including recent one were rather strong.
    If you will take a look at market mechanics - yesterday's drop should not happen, as bottom of right shoulder already has been formed and supported by WPS1 and MPP. So, normally DXY should continue upward action.
    But this has not happened - and we've got another drop by "222" Sell pattern. This looks irrational and significantly increases risk of further downside action, which means upward continuation on EUR. Here we could talk about at least 93 area. Potentially market should drop back to 92.40, but let's focus only on nearest target as we come closer to long holidays...
    That's being said - it is definitely not good moment for long entry, at least technically. But, as I've said in beginning - be prepared for surprises as market stands rather thin.
    FreddyFX and Lolly Tripathy like this.
  5. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Good morning,

    (Reuters) - The dollar was supported on Wednesday by expectations of a U.S. tax overhaul while a sharp rise in German bond yields helped to underpin the euro.

    The House of Representatives approved the biggest U.S. tax overhaul in 30 years on Tuesday, though Congressional Republicans will likely need to hold another vote later on Wednesday because of procedural issues.

    The dollar edged up 0.1 percent to 112.95 yen, having pulled away from Friday’s low of 112.035, with last week’s high of 113.75 seen as its next target.

    But gains in the dollar were limited as many market players looked to the Bank of Japan’s two-day policy meeting ending on Thursday, for clues on whether the BOJ will join the U.S. Federal Reserve and European central banks in winding back stimulus.

    A speech by BOJ Governor Haruhiko Kuroda in November sparked such speculation when he mentioned the concept of a ‘reversal rate’ - a level at which low interest rates start to have more harmful side-effects than benefits.

    “There is very strong interest in the ‘reversal rate’. Kuroda’s news conference (when the BOJ meeting ends) will be pretty much all about just that,” said Yukio Ishizuki, senior strategist at Daiwa Securities.

    Uncertainty over the BOJ’s intentions is a major reason the yen did not slip much despite the sharp rise in U.S. bond yields the previous day, Ishizuki also said.

    At this week’s meeting, the BOJ is widely expected to keep its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year bond yields around zero percent.

    If anything, Kuroda may try to push back against some of the interpretations related to the issue of the ‘reversal rate’, said Peter Dragicevich, G10 FX strategist for Nomura in Singapore.

    “We think he will probably give the market a bit of a reality check. So we’re not expecting him to increase market expectations of any type of policy normalisation,” Dragicevich said.

    The U.S. 10-year Treasury yield stood at 2.450 percent in Wednesday’s Asian trade. On Tuesday, it had set a seven-week high of 2.472 percent, nearing a seven-month peak of 2.477 percent hit in late October.

    The surge was driven in part by expectations of tax reforms raising U.S. bond issuance, but many analysts said the immediate trigger was a jump in European bond yields on Tuesday, after Germany unveiled a plan to issue more 30-year debt next year.

    Higher euro zone yields underpinned the euro, which inched up 0.1 percent to $1.1847, after rising 0.5 percent on Tuesday.

    Against the yen, the euro stood at 133.79 yen, not far from strong resistance levels around 134.50.

    Elsewhere, the Canadian dollar stood at C$1.2873 to the U.S. dollar after having hit a five-month low of C$1.2920 on Tuesday.

    In addition to the U.S. dollar’s general firmness, the Canadian dollar has been undermined by worries over renegotiation of the North American Free Trade Agreement (NAFTA).

    Investors worry that terminating NAFTA could hurt Canada’s economy and pressure its currency.

    Canada sends 75 percent of all its goods exports to the United States and could be badly hit if Washington walks away from NAFTA, which U.S. President Donald Trump has blamed for American job losses and his country’s big trade deficits.

    So, markets right now show a lot of noise in price action. To better understand situation on dollar index and corresponding markets - we need to take a look at weekly chart. Here is major background for our expectation of further USD drop. In fact, DXY stands in first upside bounce after long lasting collapse and we have a kind of B&B "Sell" LAL setup.
    Existing bearish momentum demands deeper retracement. Now market stands at 50%, but it is definitely not sufficient. It should be at least 5/8 or even lower - closer to the lows. That's why we think that on daily and intraday charts Index should drop more:

    That's why we continue to watch for H&S pattern on daily chart and wait for downward action. Here minimum target that should be achieved stands around 92-92.30 area:

    This is potential butterfly "Buy" and 0.618 COP extension of major AB-CD pattern. This is shy target. Usually in such circumstances markets drop further.

    On EUR, correspondingly it should be upside continuation... At least while market stands below 94 here and keeps valid H&S shape - chances on downside action will exist.
    Lolly Tripathy, FreddyFX and Robban68 like this.
  6. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Good morning,

    (Reuters) - The dollar traded near a one-week high against the yen on Thursday, supported by a rise in U.S. bond yields and showing limited reaction after the Bank of Japan kept interest rates steady as expected.

    The dollar held steady at 113.40 yen, clinging near Wednesday's high of 113.47 yen, its strongest level since Dec. 13.

    A rise beyond last week’s high of 113.75 yen would send the dollar to its highest point in more than a month.

    In a widely expected move, the BOJ maintained the 0.1 percent interest it charges on a portion of excess reserves that financial institutions park at the central bank. It also maintained its yield target for 10-year Japanese government bonds around zero percent.

    Market players are now looking to a post-meeting news conference by Governor Haruhiko Kuroda at 0630 GMT, for clues on whether the BOJ is getting closer to joining the U.S. Federal Reserve and European central banks in winding back stimulus.

    A speech by Kuroda in November sparked such speculation when he mentioned the concept of a “reversal rate” - a level at which low interest rates start to have more harmful side-effects than benefits.

    If Kuroda’s Thursday comments are interpreted as hawkish, the dollar might come under pressure against the yen, said Stephen Innes head of trading in Asia-Pacific for Oanda in Singapore.

    “If he maintains the dovish narrative, which we’re all expecting, maybe we get a little bounce higher on dollar/yen,” Innes said.

    However, he added that he wasn’t expecting Kuroda’s comments to trigger any aggressive moves.

    Analysts said the dollar was supported against the yen after the U.S. 10-year Treasury yield rose to a nine-month high on Wednesday as investors worried over whether a U.S. tax overhaul including tax cuts would lead to higher U.S. debt, increased bond issuance and more aggressive rate hikes by the Fed.

    The Republican-controlled U.S. House of Representatives gave final approval on Wednesday to the biggest overhaul of the U.S. tax code in 30 years, sending a sweeping bill to President Donald Trump to sign.

    The euro held steady at $1.1866, having gained around 1 percent so far this week. Analysts say a rise in German bond yields this week has helped underpin the euro.

    Against the yen, the euro was little changed at 134.56 yen. On Wednesday, the euro had risen to as high as 134.76 yen, its strongest level against the yen since October 2015.

    So, market shows less and less activity as we come closer to holidays. Our suggestion on DXY downward continuation was supported by price action. EUR also has shown upside motion.

    On EUR short-term sentiment looks positive as price stands now above MPP, WPP and WPR1. But 1.17 is Agreement resistance and here we should expect some retracement:

    On 4-hour chart there are two important moments exist. First is - December gap has been closed. Second - EUR has formed "222" Sell pattern. Upside AB-CD creates Agreement with daily Fib resistance. It means that we could get at least 3/8 retracement here:

    Final part of AB-CD action takes the shape of butterfly "Sell". Thus, most probable destination for bouce is 1.1830 K-support area.

    So, if you're scalp trader - watch for small bearish patterns around the top of butterfly. For long entry it is better to wait for retracement, although it is a question what volatility will be before the holidays...
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  7. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Good morning,

    (Reuters) - The dollar edged up on Friday though it remained on track for weekly losses, while the euro slumped after Catalan vote results indicated a victory for separatists in a blow to Madrid.

    Spain’s government had hoped that the Catalan election would strip pro-independence parties of their control of the regional parliament and end their campaign to force a split. But with 96 percent of ballots counted in a vote to elect Catalonia’s regional parliament, separatist parties are seen winning 70 seats out of 135.

    The euro was down 0.2 percent at $1.1848 after dipping as low as $1.1817 in the Asian morning session. It pared its weekly gain to 0.8 percent.

    “There is support around $1.1800 level which will likely limit the euro’s downside,” said Yutaka Miura, a senior technical analyst at Mizuho Securities.

    “This time of year, though, ahead of the holidays, many market participants are away and liquidity is thin, so we need to watch cautiously,” he added.

    The dollar index, which measures the U.S. currency against a basket of six major rivals, was up 0.1 percent at 93.400 For the week, it was down 0.6 percent.

    One immediate threat to dollar bulls was removed on Thursday, as the U.S. Senate approved a bill to fund the federal government through Jan. 19 and avert agency shutdowns ahead of a Friday midnight deadline. The bill now goes to President Donald Trump to sign into law.

    Also underpinning the dollar, Congress approved the most significant U.S. tax code overhaul in three decades that was expected to give at least a short-term lift to already solid economic growth.

    U.S. third-quarter data released on Thursday showed the economy grew at its fastest pace in more than two years, powered by robust business spending.

    A separate report showed a jump in the number of Americans filing for unemployment benefits last week, but the underlying trend in jobless claims remained consistent with a tightening labor market.

    But the tax reform plan is also seen piling on at least $1 trillion to the national debt in 10 years, which helped send the 10-year Treasury yield to a nine-month high of 2.504 percent on Thursday. It last stood at 2.480 percent, compared with its U.S. close on Thursday of 2.483 percent.

    The dollar was steady on the day against the yen at 113.32, poised to gain 0.6 percent for the week.

    “Dollar-yen trading has paused for now, with the tax bill and the shutdown bill now out of the way, and the Christmas holiday ahead,” said Kumiko Ishikawa, FX analyst at Sony Financial Holdings in Tokyo.

    “After Christmas next week, the dollar could finally respond to higher U.S. interest rates, and make a move higher,” she added.

    On Thursday, Bank of Japan Governor Haruhiko Kuroda reinforced expectations that the BOJ was in no hurry to move away from its ultra-loose monetary policy.

    Speaking after the BOJ held interest rates steady as widely expected, Kuroda said his earlier reference to a “reversal rate” did not indicate a change in his thinking on monetary policy.

    Volatile cryptocurrency bitcoin momentarily tumbled below $14,000 on the Bitstamp exchange on Friday, down roughly 30 percent from its record top near $20,000 set at the week's start.

    So, Merry Christmas to everybody, I'm not sure that you will read this... anyway, we will take just briefly on EUR and on JPY in second today's video.

    On EUR our yesterday trading plan was correct. Indeed, market has shown necessary respect to daily 5/8 Fib resistance:

    ...and to "222" Sell pattern. Thus, minimum target of 3/8 retracement has been completed:

    As higher time frame analysis points on possibe EUR appreciation - here we will be watching for bullish patterns. Probably not today, but on Tue, after long week-end...

    On hourly chart EUR has dropped precisely to our 1.1824-1.1830 K-support area and creates an Agreement support as well, since AB-CD XOP target has been met:

    As drop was rather fast - it is logical to watch for deep retracement back inside the spike range. Here I even put the marking - "Look for "222" Buy" or 5/8 Fib retracement". So, that is what we indend to do....
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