Dollar Index Cycles Through Resistance

U.S. ADP employment numbers were strong, but with little equity or forex reaction of note initially. Traders await the completion of near-term cycles on the major pairs that will set up a raft of mid-term and long-term potential trades. January is building the potential to be a very busy month for currency trade.

Wednesday trade moved forex to test USD resistance ahead of a raft of U.S. red-flag economic releases that hit the wires this week, with EUR/USD being the largest mover down against the dollar. Most pairs were at their opening prices as European equities sold off and tested 6890 support on the German Dax in a drop of over 2% on the previous session high, but most currencies moved lower against the dollar as U.S. trade got under way.

Global commodities consolidated at support after the previous session selloff as traders await confirmation that the one-day up one-day down pattern of trade will play out rather than this being the start of a bear market move in metals and oil.

The dollar index broke 80.00 resistance, and in doing so, signaled that the greenback may be in for a period of buying if S&P 500futures trade is contained under 1270 and the economic indicators this week print as expected.

The U.S. ADP numbers showed 297k private sector jobs added last month, in a pre-cursor to a positive Non-farm Payroll read on Friday. Equity reaction to the numbers has been muted, which has allowed the USD to find buyers.

Marco Hague is one of the founders and principals of The London Forex Broadsheet (commonly known as TheLFB), a global forex trader portal with headquarters in the U.S. Hague began his career with the Bank of England dealing with foreign exchange control, and he has been trading for the last three decades. He has been involved with institutional risk asset ratio analysis and the implementation and maintenance of institutional trade desks globally.

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