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Donald Trump’s suggestion the Federal Reserve should put a halt to the rise in interest rates caused a sharp reversal in the Dollar in the early part of the New York session which continued to the end of the trading week. Dollar fell across the board, most notably against the Euro and the British Pound, although he has since reiterated that he respects the independence of the Federal Reserve, thus ruling out any possible intervention in the future.

It would be highly unlikely (if not impossible) for a sitting President to intervene in monetray policy the Federal Reserve committee deals with. Fed members have also weighed in on Trump’s remarks saying that his comments won’t have any bearing on their policy-making.

What it did do is provide a halt to the precipitous decline in the pair albeit likely briefly. It is unlikely to cause a shift in the downtrend that has engulfed the pair over the last two months.

Downward channel

The 4-hour chart shows the pair is currently within a downward channel. The price is currently around the middle of this channel. The top of the channel is likley to offer resistance, and what makes it more compelling is that the upper line of the channel comes in at around 1.33, which coincidentally would be the 23.6% Fibonacci retracement level (marked by the dashed line) of the decline from 1.4379 to 1.2955 seen on Wednesday. Adding to this is a third layer of horizontal resistance (the thick red line). The resistance level between 1.33 and 1.3320 is quite formidable to say the least.

We should be on the look out for how price reacts in the 1.33-13320 zone. A chart pattern indicating a sell either on the daily, 4-hour or even on the1-hour chart can be sold into with a relatively small stop.

Brexit concerns persist

But given the concerns around Brexit and the weak economic releases out of the UK in the last few days, may cause the resumption of the fall to below 1.30 before it has a chance to get back to near the 1.33 level.

Closing above 1.33 would point to further increase towards 1.3465 to 1.35 where there is further horizontal resistance and the 38.2% fib level of 1.4379 to 1.2955 decline.