November's pending sales in the US real estate market was the only released data yesterday, where they forecasted a growth of 0.2%, but a decline of -2.6% was recorded instead. Moreover, there was a decline from 20.2% to 16.4% in annual terms.
It is possible that the statistics affected the US dollar rate, but there is an assumption that the main driver for the weak dollar was speculation on it. Also yesterday, there was outrage about the health system of the United States, where intriguing headlines in the media said that the national vaccination program completely failed, despite the catastrophic situation with coronavirus. Such headlines provoke speculators to sell the dollar.
What happened on the trading charts?
The pound updated the local high on the wave of the upward movement. This turns out to be at the level of 1.3650, without reducing buyers' interest. Such a high degree of overbought does not stop speculators, but it is worth considering that the area of 1.1650/1.1700 has served as a resistance throughout history, which may well affect the volume of long positions (buy positions).
In turn, the Euro did not lag behind its counterpart in the market, which also updated the local high of the medium-term upward trend. Considering the latest movement, the quote reached the level of 1.2309, and this already reflects the lower limit of the 2018 side channel – 1.2300/1.2500.
Trading recommendation for GBP/USD on December 31
US unemployment benefits are expected to be released for today's economic calendar. However, everything about it is not pleasant.
Initial applications are predicted to rise from 803 thousand to 815 thousand, which is quite reasonable.
Repeated applications for benefits can please traders with a decline from 5,337 thousand to 5,290 thousand.
It is noteworthy that there is a shorter working day today at all major stock exchanges. Thus, trading volumes may be reduced, which will affect the volatility in the market.
As for price movements, it was previously mentioned that the quote reached the resistance area of 1.3650/1.3700, which can negatively affect the volume of long positions. In connection with the early closing, it is not excluded that the quotes will slow down, expressed in amplitude along the resistance area.
Traders will consider a following upward movement if the price is maintained above the level of 1.3700 in a four hour time frame.
Trading recommendation for EUR/USD on December 31
Statistical data is not expected to be published in Europe and Britain today. The impulse represented by Germany will also not also work today, since it is New Year's Eve. In this case, trading volumes will be reduced and trading can be boring.
Analyzing the current trading chart, it can be seen that the quote moves within the local high of the medium-term upward trend, where market participants feel pressured due to the high degree of overbought of the single currency.
We can assume that the 2018 flat range of 1.2300/1.2500 will eventually affect the volume of long positions and a massive correction for the euro will occur in the market.