This is already becoming a pattern – the US dollar makes serious gains in the late hours of the forex trading week – late Friday afternoon. The excellent Existing Home Sales supported the dollar’s rising this week. Let’s examine the pattern.
The dollar was losing today to many currencies. Regarding the EUR/USD, the Euro had good reasons to rise: the excellent Purchasing Managers’ Indexes from Germany and France reinforced the notion of recovery in the old continent, despite the fact the whole Euro zone still isn’t growing.
EUR/USD rose from 1.42 in the early morning to to 1.4350 at the peak. Also the GBP/USD, AUD/USD and other currency pairs traded against the US dollar.
This trend began changing before the release of the excellent Existing Home Sales release, as early as 12:30 GMT, and strengthened after the release. As written here in the past, American Housing is off the bottom.
American Existing Home Sales were published at 14:00 GMT and printed 5.24 million sales, much better than 5.03 that was expected, and far better than 4.89 million that was recorded last month.
EUR/USD fell down, erasing many of its gains. So did GBP/USD. Was it the effect of the economic indicator? Maybe so. But maybe, there’s a pattern?
Looking back at previous weeks, this late dollar strength happened over and over again.
Friday effect at its best.
At the time of writing, the forex markets are still open, and this trend can be reversed yet again. The conference in Jackson Hole is taking place right now, and a speech by Ben Bernanke and other speakers can move the markets back and forth. Also the stock markets that have a serious impact on forex trading, are still in action.
Still, this pattern of dollar strength in the last hours of the week is interesting and might provide a trading opportunity next week.
I’d love to hear your opinions about this phenomenon.Get the 5 most predictable currency pairs