USD Rally Pauses as EUR, GBP Gain on Italian Budget, Brexit Hopes

Talking Points:

– The DXY Index is down by less than -0.5% after hitting a fresh 2018 high yesterday (highest since June 2017).

– The Italian government will submit a new budget to the European Commission today, while UK Prime Minister Theresa May hinted that her cabinet could reach an agreement on Brexit within 48-hours.

Retail traders continue to fade advances by the US Dollar, leaving EUR/USD and GBP/USD with bearish outlooks.

Looking for longer-term forecasts on the US Dollar? Check out the DailyFX Trading Guides.

The US Dollar (via the DXY Index) is taking a breather on Tuesday after hitting fresh 2018 highs at the start of the week. However, the reason for pause isn’t due to any machinations around the US economy, Fed policy, or the US-China trade war; but rather, attention has turned to potentially positive developments in Europe that is boosting demand for both the British Pound and the Euro.

For the British Pound, there’s nothing more important at present time than the Brexit negotiations; we’ve outlined as much in our forecast for the October UK CPI report as well as the British Pound weekly technical forecast. Whereas the

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