Despite the fact that the international demand for the U.S. Dollar boosted after the Fed’s decision to raise the interest rate, the American currency dropped slightly against a basket of 10 other major currencies the other day. As this is the last trading week of the year, the tendency is likely to preserve this week since the liquidity and trading volume is usually below the average. The thing is that most traders and investors reduce their exposure to the market or even quit it for the holidays and resume trading only around the second trading week of the new year.
As expected, the American currency showed a stunning rally last week following the Fed’s decision to implement the first interest rate hike over the last 9 years. This decision made the U.S. financial assets more popular, increasing the U.S. bond yield, hereby supporting American stocks and national currency. It is especially important to keep in mind that the tendency is likely to continue in the near-future. However, Janet Yellen promised that the Fed is going to implement further interest rate hikes based on the future economic conditions. Therefore, the series of rate hikes is likely to be gradual. Some experts anticipate at least 2 more rate hikes in 2016. However, as we have just mentioned, this is going to depend on the strength of the U.S. labor market and other major economic figures taken in to account by the Fed when making its interest rate decision.
FOREX
Masterforex-V academy reports that the U.S. Dollar is still trading within the same price range between 100,60 and 97,22 against the mentioned basket of 10 major currencies. The price is currently forming wave C down. The wave level of the momentum is Daily or even higher. As you have probably guessed, the mentioned boundaries of the price range can be viewed as he closest major levels of support and resistance. With that being said, a breakout of the range will determine the direction of the near-term trend.
