Forex Market Analysis 2/20/2019

Forex Market AnalysisThere continues to be evidence of a bigger picture battle going on in the FX market where there’s more to it all than economic data.

In spite of another round of soft economic data and recent dovish comments from the ECB core the Euro has held up well into dips and has managed to find support.

There are political forces at play in financial markets these days forces that may not be as inviting to the US dollar. The US administration has been wanting to effectuate a weaker US dollar in order to re balance the economy. This means making US exports stronger and US imports weaker. The way you do that is through a weaker currency. This, of course, is what all of the worry is about global trade wars. There appears to be more room for the Fed to move towards loosening side of monetary policy. The US dollar favored last week’s horrid US retail sales and is one of those things that will get the Fed thinking more about that side of the equation.

Upward pressure building in the price of gold with plenty of demand for the hard asset despite what has been for the most part still a US dollar bullish risk positive backdrop. It will be worth keeping an eye on the price of gold in the days ahead to see if the yellow metal can push through critical resistance in the form of 2016 high up at 1375.  Today gold traded up to its highest levels in many months and if the run continues and we see a break of that 1375 2016 high.

We had seen some yen weakness that was attributed to perceived dovish comments from BOJ Kuroda. The market was a little too sensitive to the comments that it seems to be more about an academic exercise entertaining possibility of what the BOJ could do and not what it would do.

The pound has responded well to a batch of reasonably solid employment data. Theresa May will be meeting with the EU Juncker on Wednesday.