Dollar Choppy on Fed Conflicting Comments

23 August, 2016

The recent moves of the dollar seem to be a bit irrational as a result of conflicting comments from Fed members. The dollar index rebounded on 18th Aug, the next day broke the upside downtrend channel resistance at 94.49, helped by the hawkish comments from New York Fed president Dudley and the San Francisco Fed president Williams, after hitting a low of 94.09, where near the 61.8% Fibonacci retracement level at 94.06. This is after the more dovish stance taken by Fed Chairman Janet Yellen in last Wed’s FOMC minutes.

Yesterday 22nd Aug the bullish momentum continued, the dollar index broke the resistance at 94.73, before testing the next major resistance level at 95.00. The bullish momentum was encouraged by the hawkish comments from the Fed Vice Chairman Fischer, that a rate hike by end of the year is still possible, as the US economy is close to meeting the Fed’s target.

Yet the price retraced immediately, then breaking the support line at 94.35 today, and testing the next support line at 94.20. The market expects only 15% chance of a rate hike in Sep, and 46% chance in Dec.

The US New Home Sales (MoM) and New Home Sales Change (MoM) for Jul and Manufacturing PMI for Aug, will be released, at 15:00 GMT+1 on Tuesday 23rd Aug. The New Home Sales rose 3.5% to 592,000 in June, from 572,000 in May, reaching the second highest level since Feb 2008. New Home Sales has shown an uptrend since Sep 2015.

Keep an eye on the upcoming figures. With positive readings, the dollar index will likely rebound. EURUSD will likely pullback and test the support at 1.1300. While lower-than-expected figures, will likely pull the dollar index down and test the previous low of 94.03 on 18th Aug, followed by 94.20. EURUSD will likely rally and test the resistance at 1.1350.

The upside resistance level of the dollar index is at 94.35 followed by 94.73 and the major resistance at 95.00.


Source link  
Markets recover after the drop

The markets decline on investors' fears that trade conflicts will drag on and slow down demand, and this dynamic coincided with breaking through important...

Markets pressured by Huawei problem

Alphabet and some other American IT companies have suspended business with Huawei, which is one of the first examples of major consequences for...

The climate is changing rapidly

British people need to fly less, drive electric cars, eat little meat and turn their home thermostats down to 19 degrees Celsius (66 Fahrenheit) in order to rein...


Chinese stocks saw their worst week

Chinese stocks have taken investors on a ride this year. Shanghai and Shenzhen have been the best performing global markets this year, with the Shanghai...

Risk-sensitive currencies on the rise

Stock markets show growth after the release of strong data for China and Japan as their respective PMIs were better than expected which supported...

Trump again puts pressure on OPEC

President Donald Trump told OPEC on Thursday that its members should start pumping more oil, marking his second warning to the producer group this year...


Turkish lira fell by 5% before elections

The Turkish lira dropped by as much as 5 percent against the dollar on Thursday morning, as the country gears up for elections this weekend. The greenback...

May won't ask for a long Brexit delay

Prime Minister Theresa May won't ask the European Union for a 'long' delay to the Brexit deadline, her office said, after pro-Brexit ministers objected...

Demand for safe assets grows

Markets remain under moderate pressure, despite the Fed comments. Powell's semi-annual speech in Congress reinforced expectations that the US Central Bank...

  


Share it on:   or