Global macro analysis for 27/03/2017

Global macro analysis for 27/03/2017:

The withdrawal of Trump's administration from enforcing the health care reform in Congress harms the dollar, but also the general sentiment of the market, as it leaves a vacuum on the risk side. You can point to the good and bad side of Friday's resolutions, but for now, there is no certainty on which to follow. Voting of the Obamacare Rejection and Substitution Act was canceled because the Republicans were unable to reach a consensus and raise enough votes. On the one hand, failure raises fears that the Trump administration won't be able to fulfill the campaign promises. But financial markets also received the signal that Trump and his entourage would now focus on tax reform, which had previously been a precursor to success in the field of health reform. Obamacare's rejection is not necessary for the tax reform, though it plunges the budget savings portfolio by some $350 billion over the next decade. The problem is also a schedule of the work of the Congress, which at the end of next week starts a monthly break. Work on a comprehensive tax reform for good will begin only in May. In conclusion, despite the control of both Houses of Congress by the Republicans, the majority failed to reject the Obamacare and approve the new Health Care Act. The growing concern about Trump's ability to carry out promised reforms weighs on the US Dollar, which is today the weakest in relation to the G10 currencies.

Let's take a look at the US Dollar index technical picture at the H4 time frame. Since the FED interest rate decision, the US Dollar was breaking the incoming support levels and now broke below the February bottom at the level of 99.21. The market conditions, however, are very oversold and the growing bullish divergence between the price and the momentum oscillator suggest the corrective rally might come any time soon. Moreover, there is still unfilled post-FED gap between the levels of 100.88 - 101.43 and this zone will be considered as the most important resistance for the bulls.

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