CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open Account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open Account
✖

Could ECB provide boost for dollar

By :   Global author , Financial Analyst
January 24, 2018 2:25 PM

The euro’s recent sharp gains could come to an abrupt end this week, as we anticipate that the European Central Bank President Mario Draghi will deliver a verbal intervention at its meeting on Thursday and dismiss speculation that the bank will end QE earlier than anticipated. This could help boost the Dollar Index, which fell to a fresh three-year low today.

The dollar took another pounding today after US Treasury Secretary Steven Mnuchin said of the weaker currency as being ‘good’ for US trade. Mr Mnuchin also added that expected growth in the economy would support the dollar in the long term. If he is correct, then the dollar could make a comeback at some point in the near future. After all, the US economy is still among the strongest in G10, with the Federal Reserve being the most hawkish of central banks out there, too. The dollar may get an oversold bounce in the coming days anyway as the major currency pairs test massive long-term levels, ahead of the release of US GDP on Friday. But perhaps its best chance for a comeback may be after 8th February when the US government is expected to run out of cash again. If and when the budget is finally passed then the dollar bears may find it difficult to justify selling the reserve currency further.

The latest drop in the Dollar Index (DXY) has push it down to another significant support between 88.50 and 89.50, levels which were previously resistance. Given that other similar levels have broken down in the past, we are not so confident about the prospects of a significant bounce here at this stage. Even if the DXY bounces here, we would treat it as just a technical oversold bounce until there is a break in market structure of lower lows and lower highs. Consequently, we won’t be able to call it a bottom unless the DXY goes on to take out key resistance levels such as 91.05, 91.92, 92.65 and finally 94.22. But make no mistake about it, the dollar’s long-term uptrend may still be intact and the entire pullback since the start of last year could just be a retracement. Always have that at the back of your mind. 

Source: TradingView.com and FOREX.com. Please note, this product is not available to US clients

StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.


This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.


CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.

FOREX.com is a trademark of StoneX Financial Ltd. This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.

© FOREX.COM 2026